Australian home prices have continued their upward trend, rising for the seventeenth consecutive month in June, according to data from CoreLogic. The report reveals that tight supply outweighed demand-side pressures and contributed to the increase in property values.
Resilience Amidst Downside Risks: Despi te several downside risks, including high interest rates, increased cost of living, and strict lending conditions, Australia’s housing market has shown resilience. Tim Lawless, Research Director at CoreLogic, highlights the positive impact of tight supply levels on the property market, noting that they have been exerting upward pressure on home prices.
Price Movements Across Major Cities: CoreLogic’s analysis reveals variations in house prices among major cities. Notably, Perth saw the highest increase in prices by 2.0%, followed by Adelaide with a rise of 1.7%, and Brisbane with an increase of 1.2%. However, Melbourne experienced a slight decrease in home prices by 0.2%.
Migration Rates and Price Movements: Demand-side factors have also influenced price movements, particularly due to above-average interstate migration rates in Western Australia, Queensland, and previously South Australia. This influx of interstate migrants has contributed to increased housing demand and further pressure on property values in these regions.
Inflation May Trigger Interest Rate Hike: In addition to the continuous upturn in home prices, consumer inflation in Australia has accelerated to a six-month high as of May. Core prices have risen for the fourth consecutive month, fueling expectations of another interest rate hike later this year. The Reserve Bank of Australia has maintained interest rates at a 12-year peak of 4.35% for five consecutive meetings, and these recent developments may influence future monetary policy decisions. In summary, Australian home prices have experienced consistent growth for seventeen months in a row, primarily driven by limited supply. This trend has outweighed the impact of high interest rates, cost of living increases, and stringent lending conditions. Variances in price movements across major cities reflect a combination of supply and demand-side factors, with migration rates playing a significant role. As the market continues to display resilience, all eyes are now on the Reserve Bank of Australia and the possibility of an interest rate hike in response to inflationary pressures.
