Home price rises slow but Sydney still up 20pc in a year: CoreLogic

Property prices are moving at their fastest rate of annual growth since 1989, with Sydney topping growth of 20 per cent in the year to August despite lockdowns.

Sydney’s property market last month recorded annual price rises of 20.9 per cent despite the city being in an extended lockdown. Picture: NCA NewsWire/Darren Leigh-Roberts

Property prices are moving at their fastest rate of annual growth since 1989, with Sydney topping growth of 20 per cent in the year to August despite lockdowns, according to property researcher CoreLogic.

However the monthly rate of price growth slowed significantly over August, recording gains of 1.5 per cent. Nevertheless, the current annual growth rate is 3.6 times higher than the 30-year average rate.

Sydney’s property market last month recorded annual price rises of 20.9 per cent despite now being in extended lockdown, with the city joining Hobart, Darwin and Canberra, which also posted rates of annual growth above 20 per cent.

CoreLogic’s research director Tim Lawless said the slowdown is likely a reflection of worsening affordability, which is more likely to be weighing on buyers than virus uncertainty.

Property prices have risen almost 11 times faster than wages growth over the past year, which has disproportionately affected first home buyers, reflected in their recent defection from the market as reflected in lending numbers.

“We saw the peak rate of growth in March and we‘ve been seeing a fairly consistent slowdown since then,” Mr Lawless said.

“I think it has a lot more to do with affordability than it does with lockdowns. Probably lockdowns have amplified this trend a little in Sydney and Melbourne, that’s clearly where we‘re seeing the rate of growth has eased the most but also they are the most affordable market as well.

“It’s pretty clear that fewer people are going to be able to participate in the marketplace, especially as we’re now starting to see a lot more focus on things like the size of a borrower’s deposits and a lot of scrutiny around loan-to-valuation ratios and debt-to-income ratios.

“It is going to be a trend going forward, where we do see this ongoing tapering, which is mostly just an affordability consequence.”

Australian housing prices have increased 15.8 per cent over the calendar year and 18.4 per cent on the same time last year.

In dollar terms, the change reflects an additional $103,400, or $1,990 per week. At the same time, Australian wages are rising at the average annual rate of 1.7 per cent.

Smaller markets continue to perform strongly alongside larger counterparts, with Hobart (up 2.3 per cent) and Canberra (up 2.2 per cent) recording the most significant monthly gains over August. Brisbane rose 2 per cent, followed by Adelaide (up 1.9 per cent), Sydney (up 1.8 per cent) and Melbourne (up 1.3 per cent). Darwin was the first market to record a drop, down just (0.1 per cent).

Perth and regional West Australian data were not reported this month due to a suspected data collection error that undervalued the market. However, the available data were included in the combined capital city result. CoreLogic is investigating.

Regional property prices have normalised and fallen in line with the national pace of gains over the few months, up 1.6 per cent for the month.