Property prices rise 20 per cent annually as some heat leaves the market

Property prices are moving at the fastest rate in more than 30 years with all capital cities and regional markets reporting gains.

McGrath Auctioneer Michael Marmora calling a property in Geelong last month. Property prices rose 1.5 per cent nationally over September. Picture: Mike Dugdale

The current property boom reached a new milestone over September, surpassing national price growth of 20 per cent.

Property prices have climbed 20.3 per cent over the past year which is the fastest rate of growth since June 1989, according to property researcher CoreLogic.

This time last year, the market had been preparing to take off following the initial Covid-19 outbreak. In real terms, the rises have lifted the national median property cost to $674,848 from $554,372 in September 2020.

Despite the record annual gains, monthly data suggests the market has well and truly moved past the record rate of growth seen in March. Over September, prices rose 1.5 per cent nationally, with all capital cities and the combined regional markets reporting gains.

CoreLogic’s executive of research Tim Lawless said despite showing a lot of strength, the speed of the market is slowing as affordability is further constrained and transactional costs such as stamp duty continue to rise.

“Even though we are seeing the annual numbers at about 20 per cent, which is clearly extremely strong, we are still seeing the monthly numbers easing off a little,” Mr Lawless said.

“Although the September numbers were originally flat against the August numbers, if you take it out to another decimal place, you can see there was a very subtle, slipping in the rate of growth.

“When you look at the longer term trend of those annual figures, it's really clear that the housing market is still moving through what is an exceptional growth phase.”

The lock down Sydney (up 1.9 per cent), Melbourne (up 0.8 per cent) and Canberra (up 2 per cent) markets each recorded strong gains for the month despite heavy restrictions on selling operations in the latter two cities for much of the month.

Smaller capitals have recorder consistent strong gains over the past 12 months, with gains in Brisbane (up 1.8 per cent), Adelaide (up 1.9 per cent) and Hobart (up 2.3 per cent). After coming out of the gates strong at the start of the boom, Perth and Darwin have began to stabilise with growth of 0.3 per cent and 0.1 per cent respectively. Mr Lawless said this could in part be due to sellers feeling more confident in the market leading to a rise in properties being offered to the market.

The tide is starting to turn on overall listing levels, which have been very low for some time and have caused exceptional competition for the high number of active buyers. Nationally, the number of new properties added to the market was up 15.7 per cent since the recent low point in mid-August on a rolling four-week count.

“It looks like the Spring selling season is well and truly in effect,” Mr Lawless said.

“Nationally and across every city, we’re seeing a rise in the number of new listings being added to the market and I think that’s a really healthy outcome for the market.”

“The market does need more homes available for sale and buyers need more choice to take some heat out of the decision making. So hopefully, as we move in the late spring and early summer, we do see this trend continuing and total listing numbers will probably start to rise as well, which we haven't seen happening since pre-Covid times.”

While this is an improvement, the trend remains 1.2 per cent below the five-year average for this time of the year.

Mr Lawless also noted the likely introduction of lending restrictions on the market, after federal treasurer Josh Frydenberg this week endorsed tighter credit policies for home lending in response to concerns around the quality of lending standards and high household debt levels. In the year to June, Reserve Bank of Australia data showed housing credit increased 5.6 per cent. Banking regulator, the Australian Prudential Regulation Authority, also reported that home loan originations with a debt-to-income ratio of at least six comprised 22 per cent of home lending in the June quarter.