Affordability constraining housing boom
House prices are growing at their fastest annual pace since 1989, although there are further signs the boom is coming off the boil.
CoreLogic’s national home value index rose 1.5 per cent in August to an annual rate of 18.4 per cent.
While the monthly increase was still above average, it was the smallest rise since January.
CoreLogic research director
Tim Lawless said the slowing rate of price growth probably had more to do with worsening affordability constraints than ongoing COVID-19 lockdowns.
‘‘Housing prices have risen almost 11 times faster than wages growth over the past year, creating a more significant barrier to entry for those who don’t yet own a home,’’ Mr Lawless said. Annual wage growth is currently running at just 1.7 per cent. Mr Lawless thought an ongoing shortage of properties for purchase would keep upward pressure on prices.
But Commonwealth Securities senior economist Ryan Felsman expects prolonged lockdowns in Sydney and Melbourne, and virus flare-ups elsewhere, are likely to slow the rapid pace of home price growth in the remaining months of 2021. He still expects annual growth of 20 per cent over the calendar year.
Housing values rose in every capital city in August, apart from Darwin, where they declined 0.1 per cent.
The annual increase of 18.4 per cent in national house prices in August equates to a rise of about $103,400 or $1990 per week.
This is the fastest annual pace of growth in housing values since the year ended July, 1989.