Property prices continue to surge, but losing steam

author-avatar By on October 01, 2021
Property prices continue to surge, but losing steam

Australian housing values are rising at the fastest annual pace since June 1989, but the monthly rate of growth is finally losing steam.

CoreLogic's Home Value Index rose another 1.5% in September, taking Australia's housing values 20.3% higher over the past 12 months. 

According to the report, the annual growth rate is now tracking at the fastest pace since 1989.

Although growth conditions remain positive, September's results are down on the peak rate of growth in March when dwelling values nationally increased by 2.8%.

ABS data released on Friday also shows that in August, new home loan commitments fell 4.3% for housing, seasonally adjusted.

Owner-occupier home loan commitments fell 6.6%.

In August 2021 the number of first home buyer new loan commitments fell 3.0%, the seventh consecutive month of falls.

It fell 2.1% compared to August 2020, the first through-the-year decline seen in two years.

That said, the average first home buyer home loan continued to grow, up $4,000 to $464,000 in a month (chart below).

In terms of mortgage value, there was also a marked slide according to ABS' head of finance and wealth Katherine Keenan.

"The value of new loan commitments for owner-occupier housing saw the largest fall since May 2020," Ms Keenan said.

"Despite this fall, the value of loan commitments was 34% higher compared to a year ago and 53% higher than pre-COVID levels in February 2020."

Lockdown-affected states led the decline in value of new home loans written, with NSW falling 9.6%, Victoria 4.9% and ACT 11%.

Change in Dwelling Values: CoreLogic

Month Quarter Annual Total Return Median Value
Sydney  1.9% 5.7% 23.6% 26.5% $1,056,093
Melbourne 0.8% 3.3% 15.0% 17.9% $775,142
Brisbane 1.8% 5.9% 19.9% 24.7% $625,291
Adelaide 1.9% 5.5% 19.1% 24.0% $529,376
Perth 0.3% 1.2% 18.1% 23.2% $524,589
Hobart 2.3% 6.4% 26.8% 32.5% $659,622
Darwin 0.1% 1.7% 20.2% 26.8% $481,767
Canberra 2.0% 6.9% 24.4% 29.0% $838,904
Combined Capitals 1.5% 4.7% 19.5% 22.9% $759,753
Combined Regionals 1.7% 5.1% 23.1% 28.6% $503,609
National 1.5% 4.8% 20.3% 24.1% $674,848

Source: CoreLogic

The monthly change in housing values remains positive across every capital city and broad rest of state region, with Hobart (2.3%) and Canberra (2.0%) recording the largest growth.

Darwin (0.1%) and the recently revised Perth index (0.3%) recorded the softest growth conditions across the capitals.

Across regional Australia, regional NSW (2.0%), regional Tasmania (1.7%) and Regional Queensland (1.7%) led September’s capital gains.

CoreLogic's research director, Tim Lawless, believes the slowing growth conditions are the result of higher barriers to entry for non-home owners along with fewer government incentives to enter the market.

"With housing values rising substantially faster than household incomes, raising a deposit has become more challenging for most cohorts of the market, especially first home buyers," Mr Lawless said.

"Sydney is a prime example where the median house value is now just over $1.3 million. In order to raise a 20% deposit, the typical Sydney house buyer would need around $262,300."

Mr Lawless also pointed to the tough conditions first home buyers may face.

"Existing home owners looking to upgrade, downsize or move home may be less impacted as they have had the benefit of equity that has accrued as housing values surged," he said.

"The slowdown in first home buyers can be seen in the lending data, where the number of owner occupier first home buyer loans has fallen by 20.5% between January and July.

"Over the same period, the number of first home buyers taking out an investment housing loan has increased, albeit from a low base, by 45%, suggesting more first home buyers are choosing to 'rentvest' as a way of getting their foot in the door."

See Also:


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Buying a home or looking to refinance? The table below features home loans with some of the lowest 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
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VariableMore details
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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

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

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  • Mobile app, Visa debit card & instant payments
VariableMore details
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YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

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

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  • 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%)

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

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Rates correct as of October 27, 2021. View disclaimer.



Image by Sandra Seitamaa via 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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Aaron joined Savings.com.au in 2021. He is a finance journalist with a keen interest in property, the share market, and improving financial literacy in young Australians.

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