Yes, prices are up … but for how long?

Are house prices really going up again? Yes. Are they going up everywhere? No. They are going up in some suburbs in some cities.

Once we accept the fact house prices are generally moving in the right direction, the next question is: can they can go higher?

Are house prices really going up again? Yes. Are they going up everywhere? No.

So, they are just going up in some cities then? Well, um, no. They are going up in some suburbs in some cities. Oh yes, and they are going up in some regional centres, but not others.

Like just about everything in investment markets these days, residential property prices just got complicated. But whichever way you look at it, national house prices are showing real signs of life.

A closer look at what you might call a tentative upswing shows a market reflecting the deeper changes triggered by the pandemic-induced recession: a huge preference for houses over units; a preference for the middle and outer-ring suburbs over the inner city; and the first signs of genuine decentralisation as a growing segment of the population seek more space.

Once we accept the fact house prices are generally moving in the right direction, the next question is: can they can go higher?

Certainly, the factors that have reversed the market direction remain in play: the RBA intends to keep official rates where they are for years to come; and the tax-sheltered nature of the family home is also pretty much baked into the system.

These factors are enough to encourage first-home buyers and refinancers. And why not? New borrowers are getting fixed interest rates in the market now for less than 2 per cent. However, a fully functioning property market does not need a blizzard of homebuyer grant programs. It needs investors to complete the picture.

Investors have been staying away as falling rents and high unemployment put a serious question mark over whether what we are seeing now can extend into next year when the government stimulus begins to fade.