House price boom continues as values rise 2.2% in May

author-avatar By on June 01, 2021
House price boom continues as values rise 2.2% in May

The property market's hot streak rolled on in May, with national home values rising 2.2% in May.

According to CoreLogic's latest data, the May rise was stronger than the 1.8% spike seen in April but weaker than the 32-year high recorded in March when values surged 2.8%. 

For the second time in three months, growth in the capital cities outpaced their regional counterparts

The combined capital city index rose 2.3% in May compared with a 2.0% rise across the combined regional areas.


Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers. 

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 23, 2021. View disclaimer.


CoreLogic's research director Tim Lawless said growth conditions remained broad based both geographically and across the housing types and valuations. 

“Values were up by more than 1% across every capital city over the month, with both house and unit values lifting across the board," Mr Lawless said. 

"Of the 334 SA3 subregions analysed by CoreLogic, 97% have recorded a lift in housing values over the past three months.

"Such a synchronised upswing is an absolute rarity across Australia’s diverse array of housing markets.”

Across the capitals, Hobart was the strongest performer with a 3.2% jump, while Perth saw the weakest growth at 1.1%. 

In the regions, regional New South Wales (NSW) led the way with a 2.5% spike, while values in Western Australia regressed 0.1%. 

Corelogicmay01.JPG

Source: CoreLogic

Mr Lawless said favourable economic conditions, low interest rates and strong consumer confidence were continuing to create demand for housing at a time when demand was far outstripping supply.

However, he noted despite the consistently strong headline result, the underlying trends had shifted over the last year. 

“The most expensive end of the market is now driving the highest rate of price appreciation across most of the capital cities, whereas early in the growth cycle it was the most affordable end of the market that was the strongest," he said. 

“From a geographic perspective, it was the smaller capital cities that led the housing market out of the COVID slump, but now Sydney has risen through the ranks to record the largest capital gain over the past three months with values up 9.3%.”

Affordability set to worsen as RBA monitors market 

CoreLogic said they expected values to rise throughout this year and next, albeit at a slower pace. 

"A slowdown in dwelling price appreciation is expected as affordability constraints progressively impact market participation, and potentially tighter credit policies looms further down the track," Mr Lawless said. 

"Messaging from the RBA has indicated they will be watching for any signs of a deterioration in credit standards that could be a trigger for tighter lending rules." 

CoreLogic said worsening affordability pressures were likely to impact first home buyers more than other segments of the market, with signs activity from the group is already lessening. 

Investors are stepping up their activity across the market, which may account for the continued strength across the board, despite affordability constraints. 

CoreLogic noted the reduction in Federal Government fiscal support had little to no impact on housing demand or growth in home values to date. 

Rental conditions remain mostly positive 

Growth conditions had eased a little over recent months but remained strong, with CoreLogic noting the first quarter of the year was seasonally strong for rental markets. 

The monthly increase in capital city dwelling rents eased from an average of 1.0% over the March quarter to 0.6% over the past two months.

Similarly, the rate of growth in rents across the combined regional areas of Australia eased back from an average of 1.4% in the March quarter to 1.0% through April and May.

Sydney and Melbourne continued to have the weakest rental conditions, especially across the unit sector where international border closures have had a more significant impact on demand. 

Sydney unit rents are 1.8% higher in the past three months but remain 7.5% below their 2018 high, while Melbourne unit rents are down 0.4% in the past three months and 8.5% below their 2019 peak. 


Photo by Titus Aparici on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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