Housing prices surge by record 6.7% in June quarter, says ABS

city skyline where property prices increase

Residential property prices increased by 6.7% in the June quarter, marking the strongest growth since the Australian Bureau of Statistics (ABS) began this particular index in 2003.

All capital city market prices saw an increase upward of 4%: Canberra led the flock with 8.2% growth, followed by Sydney (+8.1%), Hobart (+6.3%) and Melbourne (+6.1%). It has been several years since prices rose at this rate.

ABS resident dwelling increase chart
Source: Australian Bureau of Statistics, Residential Property Price Indexes: Eight Capital Cities June 2021

Over the quarter, the total value of all Australian residential dwellings rose by $596.4 billion to 8.9 trillion, the ABS data shows. This comes not long after property value broke the $8 trillion for the first time in June this year.

Even with property prices at their all-time high, Australians continue to participate in the property market, encouraged by record low borrowing interest rates. As of September 2021, the RBA continues to hold official interest rates at 0.1%, and recently issued guidance that the next rate hike is not likely to occur until 2021 at the earliest.

Unsurprisingly, NSW average residential prices were the highest at $1,093,100. However, the ACT has risen as the country’s second most expensive market with an average dwelling price rising to $891,700, with Victoria slightly behind where the average cost is now $891,500.

These ABS figures were recorded before lockdowns were implemented across NSW, Victoria and ACT, therefore don’t reflect the impact of the current restrictions.

"Persistently low levels of stock on the market were being met with strong demand and properties transacting at an increasingly rapid rate," says ABS head of prices statistics, Michelle Marquardt.

What’s happening with house listings and shortages

Many of the limited dwellings available in capital cities tend to go into auction. When a property is at auction potential buyers try to outbid each other, causing property prices to skyrocket. 

Since restrictions were introduced, the number of advertised listings has fallen. This will likely put further upward pressure on prices as buyers across the country compete with one another amid a shortage of properties.

The meteoric rate of growth is expected to slow, however, as affordability constraints begin to weigh on the market.

Mozo’s banking and interest rate expert, Peter Marshall says it’ll be a long while before property prices slow down in growth.

“As prices push higher there will be fewer and fewer people that can afford to buy into the market, and the prudential regulator may decide to intervene to limit risky lending, which will also lock some people out of the market,” he says.

If you are thinking about entering the property market soon, check out Mozo’s home loan guides to help you on your journey.

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