Australia Top 5 For House Price Growth
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Australia Top 5 For House Price Growth

It’s the first time in six years the nation has ranked so highly.

By Terry Christodoulou
Mon, Dec 13, 2021 1:26pmGrey Clock < 1 min

The Knight Frank Global House Price index for the September Quarter showed Australia in fifth place with 18.9% year on year growth — up from 16.4% in the June quarter.

At the end of June, Australia was in 7th place on the index.

Turkey topped the list, recording a 35.5% jump in house prices year-on-year. It is followed by South Korea (26.4%), New Zealand (21.9%),  Sweden (20.3%) and Australia.

The index, which tracks 56 countries and territories,  pointed to global house prices rising with 96% of the markets recorded experiencing positive annual growth.

The value of an average home increased by 9.4% in the 12 months to the September quarter — last year saw a lift of 9.2%.

A total of 46% of the housing markets recorded achieved annual price growth of more than 10%.

Australia hadn’t been in the top 5 of the index since the end of 2015—before a clampdown on lending came in.

“As at Q3 2021, the Australian mainstream market has had eight quarters of uninterrupted positive annual growth, and the market continues to heat up as much desirable stock is in short supply and interest rates remain at historic lows,” said Shayne Harris, Knight Frank Australia head of residential.

“As we move into 2022, we expect Australians to be influenced by further restrictions on lending, an increase in house listings and different considerations about how they deploy their capital as international travel resumes and some elements of pre-Covid life return,” he said.

 

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House values continued to fall last month, but the pace of decline has slowed, CoreLogic reports.

In signs that the RBA’s aggressive approach to monetary policy is making an impact, CoreLogic’s Home Value Index reveals national dwelling values fell -1.0 percent in November, marking the smallest monthly decline since June.

The drop represents a -7.0 percent decline – or about $53,400 –  since the peak value recorded in April 2022. Research director at CoreLogic, Tim Lawless, said the Sydney and Melbourne markets are leading the way, with the capital cities experiencing the most significant falls. But it’s not all bad news for homeowners.

“Three months ago, Sydney housing values were falling at the monthly rate of -2.3 percent,” he said. “That has now reduced by a full percentage point to a decline of -1.3 percent in November.  In July, Melbourne home values were down -1.5 percent over the month, with the monthly decline almost halving last month to -0.8%.”

The rate of decline has also slowed in the smaller capitals, he said.  

“Potentially we are seeing the initial uncertainty around buying in a higher interest rate environment wearing off, while persistently low advertised stock levels have likely contributed to this trend towards smaller value falls,” Mr Lawless said. “However, it’s fair to say housing risk remains skewed to the downside while interest rates are still rising and household balance sheets become more thinly stretched.” 

The RBA has raised the cash rate from 0.10 in April  to 2.85 in November. The board is due to meet again next week, with most experts still predicting a further increase in the cash rate of 25 basis points despite the fall in house values.

Mr Lawless said if interest rates continue to increase, there is potential for declines to ‘reaccelerate’.

“Next year will be a particular test of serviceability and housing market stability, as the record-low fixed rate terms secured in 2021 start to expire,” Mr Lawless said.

Statistics released by the Australian Bureau of Statistics this week also reveal a slowdown in the rate of inflation last month, as higher mortgage repayments and cost of living pressures bite into household budgets.

However, ABS data reveals ongoing labour shortages and high levels of construction continues to fuel higher prices for new housing, although the rate of price growth eased in September and October. 

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