It has been no secret that the Australian property market has been experiencing an unparalleled boom since the middle of 2020, but you may not be privy to the more specific details. Details that reveal just how much of a boom this has been.
In the latest residential property price index report released by the Australian Bureau of Statistics (ABS), data showed that in the three months leading up to June 2021, we recorded the strongest residential price growth on record. Across the nation, residential property prices grew by a rate of 6.7 per cent in just those three months, or to put it into context, that’s $52,600. In three months alone.
The ABS started the index in September of 2003, so we’ve just seen the strongest growth in 18 years.
Residential property prices have now reached an unprecedented level at $835,700, representing a growth of 21.22% since this point twelve months ago, when residential property prices were at $689,400.
As seen in the above chart, every capital city has experienced growth over this quarter, at a minimum of 4.6 per cent (seen in Darwin). Leading the pack was Canberra at 8.1 per cent, followed closely by Sydney at 8.1 per cent, Hobart at 6.34 per cent and Melbourne at 6.1 per cent.
The weighted average of this quarterly percentage change was the aforementioned 6.7 per cent growth.
To further contextualise what we’re seeing, we can look at the March to June 2021 quarter, in comparison to the twelve-month growth seen from June 2020 to June 2021, where the weighted average across the capital cities has seen residential property prices grow by 16.8 per cent.
Sydney has lead the way at 19.3 per cent, followed by Canberra at 19.1 per cent, Hobart at 17.7 per cent, and Melbourne and Perth tied at 15 per cent. The “slowest” growth has been seen in Darwin at 12.8 per cent, but you can’t really call that slow, can you?
If every quarter had been as strong as the last, we’d be looking at 26.8 per cent growth over the past year.
We are truly living in unprecedented times.
To further demonstrate just how much value has increased in the market, look no further than the above graph, which indicates the growth in the total value of dwelling stock from June 2018 through to June 2021.
In June 2018 we can see this value sitting just below the $7 billion mark, a value which has grown near to $9 billion in just three years. In just those three months leading up to June this year, the total value of residential dwellings in Australia rose by an incredible $596.4 billion.
The number of residential dwellings also grew by 44,400 in the quarter, to stand at 10,679,500.
So the real question on everyone’s lips is “how long can this continue?”
RBA Governor, Phillip Lowe, has stated that interest rates will only rise under a number of conditions:
- When wages are growing at a rate of at least 3 per cent, per annum
- When inflation is comfortably within a 2-3 per cent band
Dr Lowe can be quoted saying “Our judgement is that this condition for a lift in the cash rate will not be met before 2024”.
This means that favourable lending conditions will remain for the next few years, at a minimum. These favourable conditions working in conjunction with the Australian financial markets, unsatisfied demand for property, impending migration, and much more, are why many experts are bullish that it isn’t too late to purchase property in the current economic climate.
I highly recommend if you haven’t checked it out already, to view my webinar interview with Dr Andrew Wilson, leading economist from My Housing Market. In just 26 minutes and 12 seconds of action, it details:
- The key characteristic of the Australian housing market – interruptions, and how we continuously overcome them
- Why the COVID-negative predictions were so wrong
- How our access to finance operates as an “orderly underlying driver”
- Why the fundamentals of the property market remain strong
- When interest rates are likely to change (we could be as far away from another interest rate increase as we’ve ever been)
- How the unsatisfied demand in the market is set to bolster growth further
- Predicted market growth in 2022 & beyond (5 – 10% growth left in this cycle!)
It’s not too late to capitalise on these favourable market conditions.
Request a strategy session with one of our Senior Property Wealth Planners below, to ensure you make the most of this property boom.