National home values rose 1.9% in June, taking annual growth to 13.5% for the financial year. The growth in Australian dwelling values was led by houses, which rose 15.6% over the year, compared to a 6.8% lift in unit values, according to CoreLogic.
This is the highest annual rate of growth seen across the Australian residential property market since April 2004, when the early 2000’s housing boom was winding down after a period of exceptional growth. However, there are some markets where performance is starting to ease more notably.
Performance gap narrows
Each of the capital cities saw an uplift in dwelling values in June, ranging from a 3.0% rise in Hobart to a more subdued 0.2% lift in Perth. The performance gap has narrowed between regional Australia and the capital cities, though regional Australia did outperform slightly in monthly growth terms, rising 2.0% through June compared to 1.9% across the combined capital cities.
Darwin maintained the highest annual rate of growth across the capital cities, increasing 21.0% in value over the financial year, followed by Hobart (19.6%). Across regional Australia, regional NSW had the highest annual growth in dwelling values (21.1%), followed by regional Tasmania (20.8%).
Monthly change in capital city home values
Demand remains strong
In May, the unemployment rate fell to 5.1%, and the underutilisation rate fell to 12.5%, the lowest level since February 2013. Consumer confidence remained elevated through June, although down from the recent April highs. Elevated savings accumulated through COVID-restrictions last year, along with a more confident consumer sector, has encouraged consumption of larger goods, such as housing. This has all occurred against a back-drop of continued low mortgage rates, which is one of the most significant demand drivers.
Advertised stock remains low
The latest listings count from CoreLogic indicates that in the 28 days to June 27th, total advertised stock remained 24.4% below the five-year average. This dynamic of strong consumer demand, and low housing supply, continues to create some urgency among buyers.
The monthly change in Australian home values of 1.9% sits well above the decade average (which is 0.4%). However, this month’s growth rate is down 30 basis points from May 2021, and 90 basis points from a recent peak in March 2021. The only capital city to see a further increase in the monthly growth rate was Canberra, where dwelling values were 2.3% higher over June, compared with a 1.7% gain in May.
Across the capital cities, a loss of momentum was most evident across Perth and Darwin. For Perth dwellings, the monthly growth rate in values had averaged 1.4% between January and May 2021, but fell to 0.2% through June. Across Darwin, the monthly growth rate in dwelling values averaged 2.1% between January and May, but was just 0.8% through June.