Australian house prices have posted their biggest monthly gain in more than 17 years as low interest rates, short supply and government stimulus continue to fuel a strong recovery from the lowest COVID-19 slump.
According to the latest analysis from CoreLogic, property values improved in every capital city over February, with Sydney and Hobart the strongest performers.
The combined national gain of 2.1% was the largest month-on-month value increase since August 2003.
| Capital city | Month | Quarter | Annual |
|---|---|---|---|
| Sydney | 2.5% | 3.6% | 2.8% |
| Melbourne | 2.1% | 3.5% | -1.3% |
| Brisbane | 1.5% | 3.5% | 5% |
| Adelaide | 0.8% | 2.7% | 7.3% |
| Perth | 1.5% | 4.2% | 4.6% |
| Hobart | 2.5% | 4.8% | 8.7% |
| Darwin | 0.7% | 5.5% | 13.8% |
| Canberra | 1.9% | 3.7% | 9.7% |
| Combined capitals | 2% | 3.6% | 2.6% |
| Combined regional | 2.1% | 5.4% | 9.4% |
| National | 2.1% | 4% | 4% |
Source: CoreLogic.
Property prices overall have gone up 4% since 1 March 2020, the month in which Australia closed its borders to all non-residents and social distancing rules were imposed to combat the growing pandemic.
CoreLogic's monthly Home Value Index report noted that "overall, Australia’s housing market is now well entrenched in one of the strongest growth phases on record.
"For housing values and activity to be surging during a global pandemic seems counterintuitive, however the factors driving this growth are significant and diverse," the report said, citing record low mortgage rates, improved consumer sentiment and record low advertised stock levels among those factors.
The report also warned, however, that "there are some headwinds ahead in the form of a reduction in fiscal support from the federal government, home loan deferral arrangements expiring and migration remaining stalled.
"The wind-up of JobKeeper and the COVID supplement for JobSeeker is likely to cause a temporary slowdown in the economic recovery, which could slow some of the housing market exuberance," it said.
Despite these cautious notes, however, CommBank Senior Economist Kristina Clifton still forecasts "strong gains ahead of 14% over the next two years.
"The leading indicators of dwelling prices are strong. In particular lending is growing at a strong pace and auction clearance rates are very high," she said.