House prices continue to rise in July but experts flag imminent slowdown
House prices across the country continued to boom in July but property analysts are noticing signs of a slowdown triggered by affordability concerns and the Greater Sydney lockdown.
Property prices surged 1.6 per cent higher last month, CoreLogic data released on Monday morning shows. Dwelling values are now 14 per cent more expensive than the start of the year and more than 16 per cent in the last 12 months in the fastest rise in more than 25 years.
The property boom continued in July but there are signs of slowing.Credit:Graham Tidy
Sydney property prices increased 2 per cent in July, however this was down sharply from a 3.7 per cent monthly increase in March. The median house value increased 2.1 per cent to almost $1,260,000, while apartments increased 1.6 per cent to about $810,000.
Melbourne post a 1.3 per cent property value increase over the month with the median priced house up 1.7 per cent to $946,000 and apartments up 0.4 per cent to $613,000.
CoreLogic research director Tim Lawless said there are now signs the market is losing steam as the monthly growth rate has dropped below the peak in March at 2.8 per cent.
âSydney is the most expensive capital city by some margin and it has also been the city where values have risen the most over the first seven months of the year,â Mr Lawless said. âWorsening affordability is likely a key contributing factor in the slowdown here, along with the negative impact on consumer sentiment as the city moves through an extended lockdown period.â
He said housing is moving out of reach across the country as home prices rise faster than incomes and some coronavirus-related support ends.
âOn the flip side, demand is being stocked by record low mortgage rates and the prospect that interest rates will remain low for an extended period of time,â he said. âThe mismatch between demand and advertised supply remains a key factor placing upwards pressure on housing prices.â
Canberra is currently leading the country with the fastest growing prices over July, with houses and unit values up 3 per cent and 1.3 per cent respectively. Brisbane house prices increased 2.2 per cent over the month while apartments were up 0.8 per cent. Regional areas are largely growing in-line with their city counterparts.
One of the nationâs biggest banks has forecast property prices to rise more than 20 per cent over 2021 and 2022. But rapidly rising property prices have led to increased scrutiny from the Reserve Bank of Australia, which has been keeping a closer watch on lending standards as investors poured back into the market following the height of the pandemic last year.
The continued high rate of property price growth has also concerned housing affordability advocates and politicians. Liberal MP Jason Falinski is leading a federal inquiry into housing supply to examine taxes, charges and regulatory settings at local, state and federal levels.
Homelessness Australia chair Jenny Smith has raised concerns the total spend by the federal government on social housing and homelessness has been cut by almost $1 billion in real terms over the past decade as house prices and rents rise.
Ms Smith has warned that there has been a 15 per cent increase in people asking homelessness services for help since 2013.
âEverybody needs a home, but rising house prices and rents over the past decade have pushed more and Australians out of housing and into homelessness,â she said.
âBuilding more social housing would mean every Australian could have an affordable home, we could end homelessness, and people on low incomes would no longer be forced into housing stress or overcrowded homes.â
Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.
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