CoreLogic data shows that the home value index for May was up 2.2%.
The rise in May was stronger than in April, when prices rose by 1.8%. However, the rise is still weaker than the 32-year-high recorded in March 2021, which was 2.8%.
The combined capital city home values rose 2.3%, while the increase was 2% for combined regional areas. This is the second time in three months that growth conditions in capital city values outpaced regional markets.
Tim Lawless, head of research at CoreLogic, states, “The combination of improving economic conditions and low interest rates is continuing to support consumer confidence which, in turn, has created persistently strong demand for housing. At the same time, advertised supply remains well below average. This imbalance between demand and supply is continuing to create urgency amongst buyers, contributing to the upwards pressure on housing prices.”
Which states or territories are experiencing growth?
Sydney is experiencing fast growth in its housing values. Its annual growth rate is higher than the smaller capitals and regional New South Wales and regional Tasmania.
Darwin’s house values rose 20.3% over the past 12 months.
Housing values across regional New South Wales and regional Tasmania were up 18.6% and 18.1%, respectively.
On the other hand, the weakest housing markets were in regional Western Australia, which had a 0% annual growth rate and Melbourne, where extended lockdown stunted its annual growth rate at 5%.
A snapshot of the property market in May 2021
High sales activity
Even though new listings are performing 15% above the five-year average, sales activity over the three months to May tracked at 37% higher than the five-year average.
There are about 1:1 sales for every new listing. This high rate of absorption is keeping the number of advertised properties low, even with the rise in new listings.
High auction clearance rates
The low stock and high demand are supporting a high auction clearance rate.
Auction clearance rates throughout May were at 70%, which is higher than the decade average of 64%.
The median time on the market is at 25 days, while vendors are offering a 2.7% discount on property prices.
The higher-end market is driving capital gain
Across combined capitals, the upper-quartile market increased by 9.2% over the three months ending in May, compared with a 4.2% rise for the lower-quartile market.
Affordability constraints are becoming more pronounced in Sydney and Melbourne’s property markets.
In Sydney, the value of its higher-end market rose by 12% over the past three months, compared with a 5.2% rise for its lower-end market. Similarly, Melbourne’s higher-end market experienced a 6.5% rise over the past three months, while its lower-end market rose by 3.5%.
However, in Darwin and Hobart, their lower-quartile market experienced stronger growth than the higher quartile.
Darwin had a 12.4% increase in its lower quartile compared with a 4.7% rise in the upper quartile while Hobart had a 9.9% lift in its lower quartile compared with a 6.6% lift in the upper-quartile market.
Rental market underperforming
The average gross rental yield across combined capitals was 3.2%, which is lower than the yield of 3.5% at the same time last year. Almost all capital and non-capital cities (except for Darwin, Perth and regional Western Australia) had a drop in rental yield.
Sydney and Melbourne are experiencing weak rental conditions due to closed international borders. The house rents in Sydney rose 2% and unit rents rose 1.8% over the past three months. House rents in Melbourne rose 0.9% and unit rents were up 0.4%.
However, Darwin and Perth have tight rental markets. In Darwin, house rents were up 21.9% over the past year, while unit rents were 17% higher. Perth’s house rents rose by 16.6% while unit rents rose 14.2%.
With high sales activity and auction clearance rates, there are many potential buyers in the market right now.
With property prices expected to rise throughout 2021, it’s best to get pre-approved so you know how much you can afford.
Our mortgage brokers are here to help. Call us on 1300 889 743 or enquire online today.