House prices have risen in every Australian capital despite the Reserve Bank raising interest rates for the 11th time in a year last month.
A record 400,000 migrants are expected to move to Australia this financial year, with new CoreLogic data showing overall prices in the capital rising for a third straight month in May.
A shortage of rental properties has led to a rebound in property values, even though the Reserve Bank raised rates last month for the 11th time since May 2022.
CoreLogic research director Tim Lawless said buyers were now afraid of missing out.
“With such a shortage of available housing stock, buyers are becoming more competitive and an element of FOMO is creeping into the market,” he said.
“Amid increased competition, auction clearance rates have soared higher, remaining at 70 percent or more for the past three weeks.
‘With private sales, homes are sold faster and with less supplier discounts.’
Sydney had the largest increase of 2.1 percent in May, pushing the median house price to an even more prohibitive level of $1,293,529.
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House prices have risen in every Australian capital despite the Reserve Bank raising interest rates for the 11th time in a year last month. Sydney (auction pictured) had the largest increase of 2.1 percent in May, pushing the median house price to an even more prohibitive level of $1,293,529
House prices are rising in EVERY capital city despite the 11th rise in a year
SYDNEY: Up 2.1 percent to $1,293,529, annual decline of 9.2 percent
MELBOURNE: Up 0.9 percent to $911,007, annual decline of 8.6 percent
BRISBANE: Up 1.5 percent to $792,125, annual decline of 11.1 percent
ADELAIDE: Up 1.1 percent to $704,448, annual decline of 0.5 percent
PERTH: Up 1.2 percent to $606,563, annual increase of 2.2 percent
HOBART: Up 0.5 percent to $696,900, annual decline of 12.4 percent
DARWIN: Up 1.6 percent to $585,732, annual increase of 0.5 percent
CANBERRA: Up 0.6 percent to $943,253, annual decline of 10.2 percent
Source: CoreLogic median house price data for May 2023
Melbourne, another city receiving a large influx of migrants, saw the average price rise 0.9 percent to $911,007.
House prices in Brisbane rose 1.5 percent to $792,125, while values in Adelaide rose 1.1 percent to $704,448.
Perth, Australia’s most affordable capital, saw median house prices rise 1.2 percent to $606,563.
Hobart prices rose 0.5 percent to $696,900 while Darwin values rose 1.6 percent to $585,732.
Prices in Canberra rose 0.6 percent to $943,253.
The Commonwealth Bank’s head of Australia’s economy, Gareth Aird, said a housing shortage during a slump in construction activity had led to a general recovery in prices.
“The problem in the housing market is quite easy to define,” he said.
Everyone needs a roof over their head. So more people means more underlying demand for housing.
‘But the supply of new homes is not keeping pace with the accelerating population growth.’
The price increases in every state and territory occurred even after the Reserve Bank of Australia raised cash rates in May for the eleventh time in a year to a new 11-year high of 3.85 per cent.
This has led to average monthly repayments, a $600,000 loan increase of 56 percent to $3,594, up from $2,306 in early May 2022, when the cash rate was still 0.1 percent.
Borrowers now owe $15,456 more than they did a year ago.
The 30-day interbank futures market now expects an interest rate hike in August that would take the RBA money rate to 4.1 percent.
The Commonwealth Bank’s head of Australia’s economy, Gareth Aird, said housing shortages during a slump in construction activity had led to a general price recovery (pictured is a Bondi tenancy row in eastern Sydney)
Financial markets changed their forecasts after official figures showed that inflation rose by 6.8 percent in April, compared to 6.3 percent in March.
That was based on the Australian Bureau of Statistics’ monthly reading, which showed the consumer price index was well above the Reserve Bank’s target of two to three percent.
Reserve Bank of Australia Governor Philip Lowe told a parliamentary hearing on Wednesday that he expected rental inflation to reach 10 percent as a population increase led to higher rents and house prices.
The population will grow by 2 percent this year. Are there two percent more homes? No,” Dr. Lowe told the Senate economics committee in Canberra on Wednesday.
‘The rate of addition to the housing stock is very slow.
‘A lot of people are coming into the country, people who want to live alone, that doesn’t work.
“The way this unfortunately resolves itself is through higher house prices and higher rents.”
The 30-day interbank futures market now expects a rate hike in August that would push the RBA cash rate to 4.1 percent after new inflation data showed an increase in April