Value of all Australian housing stock set to break through $10 trillion barrier
The value of all residential dwellings in Australia could be worth more than $10 trillion as soon as Christmas.
The total value of all Australian housing stock could break through the $10 trillion barrier as early as December, as prices increase at the fastest pace in more than three decades, stoking fears among regulators of an overcooked sector.
CoreLogic data released on Friday shows housing values increased by 1.5 per cent in September, bringing the total gain this year to 17.6 per cent.
Meanwhile, Australian Bureau of Statistics from earlier this year show that the total value of all residential dwellings leapt 23.7 per cent from $7.21 trillion in the December 2019 quarter to $8.92 trillion in the June 2021 quarter.
The average dwelling price in Australia shot up by more than $144,000 to $835,700 in that time, gaining $1575 in value every week.
Average prices in the most expensive state – NSW – have lifted by more than $193,000 to above $1m, gaining more than $2100 a week.
The rapid gains mean property will further increase its lead as the largest store of wealth in Australia, with the total market capitalisation of the ASX currently at $2.3 trillion, while the superannuation system has assets totalling $3.3 trillion.
And even as regulator concerns grow over the rapid run-up in household debt and real estate chiefs forecast a post-lockdown flood of new home listings, property prices are tipped to keep growing next year, at a more moderate rate.
Although the rate of property price growth has already fallen off peak levels, CoreLogic data shows prices on average have increased by just over 1.95 per cent every month this year – setting up the value of all housing stock to bust through the $10 trillion figure by Christmas if the rate of growth is maintained, or in the months after if the pace of growth slows.
According to NAB, home price growth will hit 20 per cent this year before slowing sharply to about 3.8 per cent next year.
“Lockdowns across Sydney and Melbourne have had an impact but with spring coming up, we anticipate seasonality to return when we usually see a lot more stock come onto the marketplace,” NAB executive for home ownership Andy Kerr said.
“As NSW and Victoria open up as vaccination rates increase, listings particularly in Melbourne will surge towards the end of 2021.”
Real estate chiefs are also confident there will be continued house price growth next year at a lower rate.
The Agency group CEO Geoff Lucas said prices would moderate next year through increased supply, with the number of comparative market analysis (CMAs) reports ordered by people looking to sell their home rising sharply.
The Agency is predicting growth of 4-6 per cent in metropolitan markets next year.
“When we look at the number of CMAs that have been ordered over a recent seven-day period, they are 31 per cent higher than the same period in 2020 and 16 per cent higher than the same period in 2019,” Mr Lucas said.
“So what that says to us is there is a strong propensity for an increased number of homes coming to the market in the coming weeks and months.”
Ray White Group managing director Dan White said there could be “upwards pressure in the short term” before prices moderate due to regulatory intervention.
“While recent growth has been welcomed and added to the wealth effect of the country, it’s getting to the point where the government’s saying well, price growth is probably enough for the time being, and they’ll pull a few levers anyway,” Mr White said.
However, he said growth would probably stay positive due to the Reserve Bank’s commitment to not lifting interest rates until 2024.
“We don’t expect the reversal of price growth or any negative price declines while there is so much confidence that rates will remain where they are for the next few years,” he said.
Growth predictions are also now factoring in a potential tightening of lending standards, after minutes from a meeting of the Council of Financial Regulators revealed APRA had been tasked with putting together a “framework” of potential measures to rein in the market.
AMP Capital chief economist Shane Oliver is tipping 7 per cent price growth next year, with the impact of increasing supply and regulatory intervention to be somewhat offset by a recovering economy and record low interest rates.
“Still, ultra-low mortgage rates and an ongoing relatively low level of homes for sale, along with a resumption of economic and jobs market recovery once lockdowns end, point to further home price increases ahead, albeit at a slowing rate,” Dr Oliver said.
Meanwhile, data from REA Group shows that outer metropolitan and regional suburbs have been the primary beneficiaries of the recent property boom as home buyers look away from crowded cities during the pandemic.
REA Group data shows that the NSW town of Byron Bay benefited the most from this trend, with its median house price almost doubling from $1.41m in March 2020 to $2.8m at the end of last month.
The second-highest gainer was the far western Sydney suburb of Austral, up 81.15 per cent, while the central coast suburbs of Copacabana and North Avoca both gained about 80 per cent.
In Victoria, the Mornington Peninsula suburb of Somers saw its median home almost double in value, from $915,500 to $1.74m, while the relatively affordable western Victorian town of Mortlake recorded a median house price lift of 69 per cent to $287,750.
The regional suburb of Heyfield was third, rising almost 60 per cent to $315,000, while another Mornington locality, Blairgowrie, jumped almost 55 per cent to $1.42m.
In Queensland, the Noosa suburb of Sunrise Beach recorded a 70 per cent gain, with the median house price is now just under $1.5m.
It was followed by Minyama, on the Sunshine Coast, up by more than 53 per cent to $1.9m, while the inner-Brisbane suburb of New Farm lifted 49 per cent to $2.2m.
Mr Lucas said he believed price growth in these suburbs would moderate as the vaccination rate lifted and homebuyers became more comfortable with the idea of higher-density living in cities.
“Will we see a continued rush, or demand to the regions? Yes, but at a lower rate,” he said.
“So I think there’s a moderation in price growth coming in those regions as well.”
What $18m will get you on the world’s most exclusive floating residence
A penthouse on this luxury residential ship has just come up for sale, but is it worth its price tag? Come on board to see how the rich and famous kick back.
Chinese in retreat as tower site sold
Many of the biggest offshore developers that swept into the market in a decade ago have left without realising their dreams of expanding in Australia.