Housing market continues climb
Residential property in Australia is now worth $6.7 trillion.
CoreLogic’s Quarterly Housing and Economic review has found that the value of the Australian property market had grown to $6.7 trillion by the end of October 2016. The property market grew by 7.5% for the year to October, with a 2.7% increase for the quarter. While the rate of growth is below the 10.1% growth a year earlier, it has accelerated from the low of 6.1% in July.
CoreLogic head of research Tim Lawless pointed out that market performance has been “diverse” across Australian capitals, with values rising as much as 10.6% in Sydney and falling by as much as 3.8% in Darwin.
“The current growth phase for capital city home values commenced in June 2012, almost four and a half years ago, and since that time capital city home values have increased by 42.0%. To put the geographic differences in growth into perspective, over the current growth phase Sydney home values are 65.9% higher and Melbourne values are up 48.6%, the capital city with the third highest rate of growth was Brisbane where values have increased by a much more modest 19.0% over the period,” Lawless said.
Lawless said low interest rates and strong demand meant house prices were likely to continue to climb, though “the pace of this growth remains the big question mark”.
While house prices are likely to continue their ascent, Lawless said a record high pipeline of unit construction could create problems for the market in coming years.
“One area where the impact of increased housing supply is already being felt is the rental market. The combined capital cities are currently experiencing the weakest rental market conditions on record. Keep in mind that the last Census showed that units were more than two times as likely as houses to be rented. A proportion of all these units under construction will go into short-term accommodation, some will be owner occupied and some will be left vacant however, if history is a guide many of these properties will enter the rental market. Subsequently we would expect ongoing weakness in the rental market as unit supply increases,” he said.