Source : the age
Housing affordability continues to worsen across the country, experts say, as home values rise for the third month in a row on Cotality numbers.
Values have only marginally risen, however, because affordability concerns and low consumer sentiment have offset an increase in demand and a lack of supply following February’s Reserve Bank rate cut.
Home values continue to rise amid uncertain economic conditions.Credit: Max Mason-Hubers
Cotality, formerly CoreLogic, recorded a nationwide increase in home values of 0.3 per cent in its index over April to a record high. Research director Tim Lawless said rates of growth appeared to be converging in most capital cities and regional areas.
“It’s generally a very flat rate of growth,” he said. “We are seeing growth slow down in the mid-sized capitals.
“The diversity we were seeing over the past few years is starting to leave the markets.”
Sydney values rose 0.2 per cent over April, to a median of $1.19 million. Melbourne’s values grew the same amount to a median of $786,000. Brisbane and Perth grew 0.4 per cent and Adelaide grew 0.3 per cent over last month.
Hobart and Darwin were outliers; they respectively recorded 0.9 per cent and 1.1 per cent growth over April.
Brisbane, Perth and Adelaide still led the country in annual growth; all were up between 7.8 per cent to 10 per cent in the past 12 months. Sydney values only grew 0.9 per cent over the same period, and Melbourne’s fell 2.2 per cent.
“There’s been some headwinds, but the tailwinds are holding out, but only just,” Lawless said. “Affordability has been a concern and consumer sentiment has been volatile too.”
AMP chief economist Dr Shane Oliver agreed. “If you run through the [factors increasing prices], you have a shortfall of housing stock and the interest rates will come down, both major parties are offering stimulus for first home buyers at the election and the economy is likely to pick up a bit,” he said.
“But even with interest rates coming down, they’re still high, and we’re coming from a point of low affordability. Population growth is slowing down and that could be a little less pressure in terms of the supply issue, and we have uncertainty about Donald Trump and his tariffs.”
Lawless expected home values to only rise marginally over the next few months, even if the RBA cut rates at its next meeting in May. “This is going to be a very mild pace of growth unless we see rates come down very substantially,” he said.
Oliver said a marginal increase in prices over 2025 would not be enough to allow first home buyers to break into the market with ease, even with the pledged support of major parties.
“The market will price those concessions in,” he said. “If you’re offering it, people can get in with less deposits or if you get a tax break it increases demand.
“Suppose the monthly national average of growth was 0.3 per cent and this year we grow 3 per cent or just a bit more, and wages growth is 3 per cent or 3.5 per cent, you could argue that that’s a continuation of the status quo.
“But you could end up with a situation where prices accelerate next year … and it gets away from people again.”
Oliver said there was a shortfall of 200,000 to 300,000 dwellings which would need to be built or added to the market to help improve affordability.
