CoreLogic’s latest National Home Index report has revealed a stark statistic about the Australian property boom: house prices grew more in the last month than wages grew in an entire year.
It lays bare the ‘two Australias’ that now exist in the housing sector: those who have property, and are reaping the benefits of massive price growth and those who do not, and are seeing their chances of owning their own home become increasingly remote.
CoreLogic reported that house price went up 1.6% in July, taking the 12-month total for 16.1% year on year and well over the amount that wages have risen in the same period.
“With dwelling values rising more in a month than incomes are rising in a year, housing is moving out of reach for many members of the community,” said Tim Lawless of CoreLogic.
“Along with declining home affordability, much of the earlier COVID related fiscal support (particularly fiscal support related to housing) has expired. It is however, encouraging to see additional measures being rolled out for households and businesses as the latest COVID outbreak worsens.”
Cheap money is the principal source of demand, as consumers seek to lock in interest rates that are currently as a near-record low, but are now officially trending upwards and likely to rise further.
That, allied with a lack of supply in key areas, has created a seller’s market, which drives prices up yet further.
“We have seen the same trend through earlier lockdowns, where both buyer activity and vendor activity reduce before recovering to pre-lockdown levels once restrictions are eased or lifted,” said Lawless.
“With stock levels remaining tight, selling conditions have been skewed towards vendors. Auction clearance rates have remained in the low-to-mid 70% range across the major auction markets through July and private treaty sales continue to record rapid selling times and low discounting rates.”
