Value of Australian homes tops $8 trillion: CoreLogic

Property surge seals housing’s status as Australia’s largest asset class, with total value set to keep rising past $8.1 trillion, says CoreLogic.

A recent home auction in Sydney. Picture: Julian Andrews

Housing has locked in its status as the country’s largest asset class, streaking ahead of shares, superannuation and developments as price momentum builds in the market.

The total value of residential real estate in Australia has reached $8.1 trillion, according to research house CoreLogic. The figure is expected to be driven higher in coming months.

The surge in value follows recent broadbased capital gains across the country, with many markets now at their peak, and price growth continuing, albeit at a slower pace.

“The Australian dwelling market has reached fresh record highs for the past four months, but the end of April marked the first time the total value of Australian housing broke the $8 trillion dollar mark,” CoreLogic head of research, Eliza Owen, said.

In a sign of the value that Australians put on their homes and their use of cheap debt to dive deeper into the market, housing has not only become an economic driver via construction but also the main store of wealth.

“This puts Australian residential property at around four times the size of Australian GDP, and around $1 trillion more than the combined value of the ASX, superannuation and commercial real estate stock combined,” Ms Owen said.

Residential real estate tops the rankings at $8.1 trillion, followed by $3 trillion of superannuation and $2.7 trillion of Australian listed stocks, which have jumped back to trade at record levels in the wake of the crisis.

Commercial real estate lagged at $964 trillion and has been under pressure as malls and office towers have been slugged by the pandemic.

CoreLogic data shows that in the three months to April, national home values rose 6.8 per cent, the highest quarterly dwelling growth rate since December 1988.

“The increase in the value of residential real estate has put Australian homeowners in a strong equity position, with the RBA estimating just 1.3 per cent of housing loans to be in a negative equity position at the start of 2021.

“However, for many Australians looking to get a foot on the property ladder, the continued strength in the market is putting home ownership further out of reach despite record low mortgage rates. Wages growth simply isn’t keeping pace,” Ms Owen said.

A home goes under the hammer in Melbourne. Picture: Julian Andrews.

Dwelling values in Australia are 7.8 per cent higher over the year, and currently sit around 7.6 per cent above the previous October 2017 record high.

But the rise has not been universal and at the high end of market values are markedly outpacing other value tiers, while growth has been more uniform in smaller cities.

Analysis from realestate.com.au reveals a relatively high number of suburbs have seen record-breaking sales in this hot property market. So far in 2021, there have been record sales in 776 suburbs across Australia.

NSW is leading the way with 299 suburbs having broken their previous record, followed by Queensland with 158 and Victoria with 139.

In South Australia records were broken in 71 suburbs, and in Western Australia in 40 suburbs, while Tasmania was at 33 suburbs and the ACT at 30 suburbs.

Real estate ads firm REA Group said nearly half of the suburb record-breaking sales were in regional areas, suggesting the regional living trend may continue for some time to come.

The analysis said that Central Coast and Sunshine Coast were standout performers, followed closely by the ACT.

Anne Flaherty, realestate.com.au economist, put the rises partly down to people being willing to splash out more for dream properties in the wake of the pandemic.

“When people are buying their own home, they’re willing to pay above market price if they fall in love with it. For people who have sold recently, the growth we’ve seen in the market is helping them to, in turn, bring up prices in other areas,” Ms Flaherty said.

“People are rethinking where they want to live now that proximity to cities isn’t as much of an issue, and they’re thinking about what they can get for the money they would spend in an inner or middle ring suburb,” she said.

The residential market is still running hot and realestate.com.au said there was 2881 auctions scheduled for this week. In Sydney, there will be 872 auctions with 155 in regional New South Wales.

Melbourne will host 1236 auctions, with 71 in regional Victoria, while Brisbane will have 172 auctions, and 130 will be in regional Queensland. Adelaide will see 125 auctions, Canberra 86 and Perth 23.