Exciting news for home-owners has been released this week, with median house prices rising again over the June Quarter.
Australian Bureau of Statistics released an article on September 14 outlining that the weighted average value of residential properties across Australia had risen 6.7 percent this quarter. This increase brings the accumulative rise to 16.8 percent over the last 12 months; the single largest rise since ABS began recording this data in 2003.
CoreLogic’s Hedonic Home Value Index released in early August also backs up these findings, showing that properties across every state have grown in value by up to 7.7 percent this quarter. Regional Western Australia is the only area which experienced a value drop over the last quarter, with values only dropping by 0.4 percent.
The CoreLogic report also noted that although the rate at which growth occurs is slowing, values are continuing “to rise at a rate well above average across most areas of the country”.
These record-breaking highs have been reached through a lack of supply. Reserve Bank of Australia’s assistant governor for economics Dr Luci Ellis said that increasing affordability for housing is not achieved by handed out more money to spend on housing, highlighting that all that does is add further fuel to the fire.
SQM Research released monthly vacancy rate summaries, detailing how many properties are available with August’s data released on September 14, showing that the total number of vacant residential properties across Australia sitting at just 58,856. This is a drop of almost 3,000 from July’s figures.
While this may not be great news for renters or prospective home buyers, it’s a fantastic and welcome increase for homeowners and investors. While it may be argued that this housing boom is a crisis ‘deepened’ by Boomers, these incredibly low rates paired with property price growth could create the perfect conditions for downsizing or expanding your investment portfolio.
ABS spokesperson and head of price statistics Michelle Marquardt said “The continued growth in property prices was occurring at a time of record low interest rates”.
Crystal Ossolinski, a spokesperson for the Commonwealth Treasury, said that interest rates – which have fallen dramatically – had a key impact on the housing market.
“Over the past year we’ve seen debt servicing increase a little bit, it certainly has not increased in line with prices and this reflects interest rates”.
The guiding factor on mortgage interest rates is the Reserve Bank of Australia’s cash rate. At time of publication, this rate sits at just 0.1 percent, and is expected to stay at this rate until at least 2024. Now may be the perfect time to look at growing your investments, or downsizing!