Housing set to bust $10 trillion
Rate of increase at 30 year high
THE total value of all Australian housing stock could break through the $10 trillion barrier as early as December, as prices increase at the fastest pace in more than three decades.
It comes as CoreLogic data released on Friday shows housing values grew by 1.5 per cent in September, bringing the total gain seen this year to 17.6 per cent.
Australian Bureau of Statistics data shows that the total value of all residential dwellings leapt 23.7 per cent from $7.21 trillion in the December 2019 quarter to $8.92 trillion in the June 2021 quarter.
The average dwelling price in Australia shot up by more than $144,000 to $835,700 in that time, gaining $1575 in value every week.
The rapid gains mean property will further increase its lead as the largest store of wealth in Australia, with the total market capitalisation of the ASX currently at $2.3 trillion, while the superannuation system had assets totalling $3.3 trillion.
And even as regulator concerns grow over the rapid runup in household debt and real estate chiefs forecast a postlockdown flood of new home listings, property prices are tipped to keep growing in 2022, at a more moderate rate. CoreLogic data shows prices on average have grown more than 1.95 per cent every month this year – setting up the value of all housing stock to bust through the $10 trillion figure by Christmas if the rate of growth is maintained.
According to NAB, home price growth will hit 20 per cent this year before slowing sharply to around 3.8 per cent in 2022.
“Lockdowns across Sydney and Melbourne have had an impact but with spring coming up, we anticipate seasonality to return when we usually see a lot more stock come on to the marketplace,” said NAB executive for home ownership Andy Kerr.
Real estate chiefs are also confident there will be continued house price growth next year at a lower rate.
Ray White Group managing director Dan White said there could be some “upwards pressure in the short term” before prices moderate due to regulatory intervention.
“While recent growth has been welcomed and added to the wealth effect of the country, it’s getting to the point where the government’s saying well, price growth is probably enough for the time being and they’ll pull a few levers anyway,” he said.
However, he added growth would likely stay positive due to the Reserve Bank of Australia’s commitment to not lifting interest rates until 2024.
AMP Capital chief economist Shane Oliver is tipping 7 per cent price growth in 2022, with the impact of growing housing supply and regulatory intervention regarding bank lending to be somewhat offset by a recovering economy and record low interest rates.