Australian house prices jump $52k in three months

It's bad news for first homebuyers, with one expert saying the “damage” has been done on housing affordability and it will take years to catch up.

Australian housing prices grew by $52,600 in just three months reaching a mean value of $835,700, according to new Australian Bureau of Statistic (ABS) data.

Just a year ago, the mean price of Aussie houses was $689,400, but costs have skyrocketed across the country.

Property prices rose by 6.7 per cent in the June quarter, according to the ABS, which was the strongest quarterly growth in 18 years.

Hal Pawson, a housing professor at the University of NSW, described the price increases as "remarkable” but said it was bad news for housing affordability.

“It means that affordability has become substantially stretched in the last year because as we know wages aren’t rising at anything like that rate – wage rises are still like 1.5 per cent – so far below house price rises, less than a tenth of the rate of house price increases,” he told news.com.au.

“A lot of people are now going to be facing several years more of saving than they were previously anticipating because of what happened in the last 12 months. Even if the boom runs out of steam and prices stabilise it’s still going to take a long time for people’s savings to catch up with.

“A lot of damage has been done to affordability because of what happened in last 12 months and that’s unlikely to be reversed. The best case might be that it ceases to get any worse.”

Skyrocketing house prices are being driven by low stock and huge demand. Picture: NCA NewsWire / Christian Gilles

Australian house prices are now 19 per cent higher than they were before the pandemic too, revealed Reserve Bank of Australia governor Philip Lowe.

He said the RBA was unlikely to lift interest rates until 2024 to dampen housing prices, which Prof Pawson said would only “pour more petrol on to the fire of the housing market”.

In a speech on Tuesday, Dr Lowe addressed concerns about rapid property price growth and called for changes to tax breaks to address housing affordability.

“The factors include the design of our taxation and social security systems; planning and zoning restrictions; the type of dwellings that are built; and the nature of our transportation networks,” he said about the problems addressing housing affordability.

Australian Reserve Bank Governor Philip Lowe has no plans to lift interest rates any time soon. Picture: James Brickwood

But Prof Pawson said that the federal government doesn’t have the appetite for changes to be made and neither does the Labor party.

“The Reserve Bank governor made it clear there should be important tax changes that ought to be made but its very unlikely that’s going to happen. He said the discount on capital gains tax is unjustifiably large and there should be a reduction and negative gearing was a tax concession that was unjustified and he was advocating for reform,” he explained.

“But the current government certainly is not going to make changes and we are not going to see changes in the short term, even if we get a different government, as Labor isn’t committed to making any changes in that area anymore.”

New homebuyers could be thin on the ground in the next few years. Picture: NCA NewsWire / Christian Gilles

However, a lot of first home buyers had made it on the property market in the past year by taking advantage of state and federal schemes, which combined offered up to $80,000 when purchasing a home, Prof Pawson added.

“But it’s very possible in the next two years we will see a negative consequence of that, because all those people in other circumstances would have been waiting to make the move to buy their first home,” he said.

“But they decided to bring the decision forward because of the opportunity for government subsidies and it may well be a bit of a vacuum effect in the next few years ... with unusually low levels of first home buyers coming into market.”

But for those looking to get on the property ladder, if international borders remain closed Prof Pawson predicates that the property boom will not continue into next year.