Australia’s national property values rose 2.2 per cent in May 2021

Property values are continuing to surge with a 2.2 per cent increase last month alone, but it wasn’t Sydney that had the biggest gain.

Australia’s property boom shows no sign of slowing down as house values continued to surge with 2.2 per cent increase across the nation in May, found CoreLogic.

Hobart saw the biggest increase with values growing by 3.2 per cent as an average home is now worth $574,543.

Sydney came in a close second with a 3 per cent surge taking the median house value in the city to $970,355. According to CoreLogic figures released today, this means the average house in the Harbour City is now going for $1.1 million with units at $800,000.

Nationally, the 2.2 per cent surge means the median value of homes across Australia has now hit $634,355 – with predictions it will continue to rise this year and into 2022.

CoreLogic’s research director, Tim Lawless, said low interest rates and improving economic conditions were driving strong demand for housing.

“At the same time, advertised supply remains well below average. This imbalance between demand and supply is continuing to create urgency amongst buyers, contributing to the upwards pressure on housing prices,” he said.

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Hobart experienced the biggest jump in value across Australia, while Perth had the smallest increase. Picture: iStock

Mr Lawless added that things had changed in the past year, with the most affordable end of the market no longer driving price increases and instead has been taken over by the most expensive part of the market across most capital cities.

“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 per cent,” he revealed.

Values were up by more than 1 per cent across every capital city over the month, with both

house and unit values lifting across the board.

There was evidence that first homebuyer demand was dropping as affordability worsened, CoreLogic’s research also found.

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First home buyers are being pushed out as affordability continues to worsen. Picture: Gaye Gerard/NCA NewsWire

Housing supply

While fresh listings added to the housing market have picked up over recent months, tracking 15 per cent above the five year average, demand is still outstripping supply.

CoreLogic estimated sales activity over the three months to May was about 37 per cent higher than the five-year average.

“The sales to new listings ratio remains around 1.1, meaning for every new listing there is more than one sale occurring,” said Mr Lawless.

“This rapid rate of absorption is keeping advertised inventory levels extremely low, despite the rise in new listings. As a consequence, vendors remain in a strong selling position while buyers have a weak position at the negotiation table.”

The total number of homes advertised for sale remains approximately 24 per cent below the five-year average.

Median time on the market remains around its record low of 25 days.

Darwin’s housing market has been depressed for years but has now smashed through the 20 per cent annual growth barrier. Picture: Katrina Bridgeford.

Regions leading the race

Although housing values are now rising the fastest once again in Sydney, the annual growth rate is generally higher across the smaller capitals, as well as regional New South Wales and regional Tasmania.

Darwin cracked the 20 per cent annual growth barrier in May, with values now 20.3 per cent higher over the past 12 months. For Darwin dwellings, this is the strongest annual gain on record.

Housing values across regional NSW are up 18.6 per cent, while in regional Tasmania values are 18.1 per cent higher.

At the other end of the spectrum, the weakest housing markets over the past year have been in regional Western Australia and also in Melbourne where the extended lockdown has created a more significant drag on the annual rate of growth.

Out of the capital cities, Perth saw the smallest gain with a 1.1 per cent increase in value taking the average value to $521,688.

CoreLogic analysed 334 subregions and found 97 per cent had 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,” added Mr Lawless.