Unwavering Upward Trend in Australian Property Prices
Home prices in Australia have been climbing steadfastly, with June marking the fourth month in a row of such an upward trend. According to the data released on Monday, the sustained constraint on housing availability has played a crucial role in escalating property values across the country.
A Close Look at Monthly Growth Figures
Renowned property consultant, CoreLogic, revealed that national home prices saw an increase of 1.1% in June from May. This comes after the prices hit a low point in February and started their continuous climb.
Australia's Household Debt and Housing Affordability Woes
Australian households are counted among the world's most heavily indebted, and recent times have seen housing affordability sink to unprecedented lows.
Reserve Bank's Response to Rising Inflation
In response to persistently high inflation, the Reserve Bank of Australia is planning to hike its benchmark interest rate by 25 basis points to 4.35% on Tuesday. However, a recent poll of economists conducted by Reuters hinted that the decision might be a close call.
State-wise Distribution of Rising Home Prices
Excluding Tasmania's capital, Hobart, all state and territory capitals have registered growth in dwelling prices. Sydney, Australia's largest city and the capital of New South Wales, led the price rise with a 1.7% surge. The capital of Queensland, Brisbane, trailed behind with a 1.3% increase.
Supply Shortage Fuelling the Price Hike
According to CoreLogic's Tim Lawless, a scarcity of supply continues to be the primary catalyst for price rises. He noted, "In June, the inflow of new capital city listings was almost 10% below the average of the previous five years."
Changing Sentiments and Future Prospects
While a "broad-based upswing" in property values is still on record, the rate of growth in most capitals is slowing down. Lawless interprets this slowdown as a possible reflection of changing sentiments, influenced by rising interest rate expectations. He anticipates that an increase in interest rates coupled with lower sentiment could negatively impact the number of active home buyers, thereby helping to recalibrate the mismatch between demand and supply.