The Australian housing market continues to show strength, with home prices climbing steadily despite economic challenges. According to data from property consultant CoreLogic, national home prices rose by 0.8% in May, marking the largest monthly gain since October. This trend of growth has persisted for sixteen consecutive months, with prices up by 8.3% compared to a year earlier. This surge can be attributed to a sustained squeeze on the supply of affordable homes in major capital cities, putting upward pressure on prices nationwide.
CoreLogic Research Director Tim Lawless highlighted the resilience of the housing market, noting that low supply levels have insulated Australian home prices from factors such as high interest rates, cost of living pressures, and pessimistic consumer sentiment. Lawless emphasized that the market has been able to absorb new listings quickly, keeping stock levels low and driving prices upwards. Despite challenges, the housing market has proven to be robust in the face of adversity.
State capital cities have experienced varying levels of price growth, with Perth leading the way with a 2.0% increase in May. Adelaide followed closely with a 1.8% rise, while Brisbane saw prices go up by 1.4%. In terms of dollar value, this translates to a median increase of over A$12,000 month-over-month. Sydney, Australia’s largest city, reported a 0.6% growth, matching the record high set earlier in the year. Despite a previous drop in values, Sydney has seen a significant rebound, with the median home price now nearing A$1.16 million. Melbourne and Canberra also saw modest price increases in May, reflecting the overall strength of the market.
A recent Reuters poll indicated that Australian home prices are expected to continue outpacing overall inflation in the coming years. The failure of builders to increase supply has contributed to making Australia one of the most expensive housing markets globally. Despite an uptick in vendor activity, inventory levels remain below average, further exacerbating affordability issues. Lawless underscored the urgent need for measures to address supply constraints and alleviate the pressure on homebuyers.
The Australian housing market remains in a state of flux, with rising prices posing challenges for prospective buyers. While the resilience of the market is commendable, addressing the supply-demand imbalance is crucial to ensuring long-term affordability and sustainability in the housing sector.