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Residential Property

Property value growth hits 20-year peak

property value growth

The rate of increase in the value of Australian housing has hit a 20-year high even as monthly growth has softened recently.

The value of Australian housing is rising at its fastest annual rate in more than 20 years, but the monthly rate of growth has continued to slow over the past six months, according to property market research firm CoreLogic.

The firm stated that following a 1.5 per cent increase in September in its national home value index, Australian housing values were 17.6 per cent higher over the first three quarters of 2021 and 20.3 per cent higher over the past year.

This annual growth rate was the highest recorded since the year ending June 1989, according to CoreLogic, which noted the monthly increase had dropped by almost half since the first quarter of the year.

“Although growth conditions remain positive, it is becoming increasingly clear the housing market moved past its peak rate of growth in March when nationally dwelling values increased by 2.8 per cent. Since that time, the monthly rate of growth has eased back to 1.5 per cent,” it stated.

CoreLogic research director Tim Lawless said the decrease in the monthly growth rate was the result of fewer government incentives and higher barriers to entry for non-homeowners seeking to enter the market.

“With housing values rising substantially faster than household incomes, raising a deposit has become more challenging for most cohorts of the market, especially first-home buyers,” Lawless said.

“The slowdown in first-home buyers can be seen in the lending data, where the number of owner-occupier first-home buyer loans has fallen by 20.5 per cent between January and July. Over the same period, the number of first-home buyers taking out an investment housing loan has increased, albeit from a low base, by 45 per cent, suggesting more first-home buyers are choosing to ‘rent vest’ as a way of getting their foot in the door.”

CoreLogic also reported the growth patterns and decline patterns seen in house values were being echoed in the rental market. While the rate of growth in national rents continued to rise, the pace of that growth was losing momentum.

“On a quarterly basis, rental growth peaked in the March quarter at 3.2 per cent and has consistently eased to 1.9 per cent in the September quarter. However, the annual rate of growth is still rising, up 8.9 per cent over the year to September,” it said.

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