The Australian property market continues to break records with national dwelling values reaching a peak in FY21 that hasn’t been seen since April 2004. If you are keen to get a foothold in the market, hang in there. Some experts say some of the heat may be coming out of the market.

Interest rate news

As expected, the Reserve Bank of Australia (RBA) decided to keep the official cash rate at 0.10 per cent this month, continuing an eight-month holding pattern.

This decision was what most experts were predicting and was in line with RBA Governor Dr. Phillip Lowe’s statement in June. At that time, he said the cash rate would likely stay the same until 2024 to allow the labour market to tighten enough to generate wage growth.

Lowe stated that the RBA would not increase the cash rate until actual inflation was sustainably within the 2 to 3 per cent target range.

Home value movements

Australia’s national dwelling values rose 13.5% over FY21, with 1.9% growth in June alone, making this the highest annual growth rate seen since April 2004, according to CoreLogic’s national Home Value Index.

Here are the key takeaways:

• Dwelling values rose across all of the capital cities in June to varying degrees (see table below).

• Combined regional dwelling values rose by 17.7% over the year, outpacing the growth of the combined capital city dwellings at 12.4%. Regional NSW had the highest annual growth in dwelling values at 21.1%.

• 582,000 residential transactions took place over the last financial year, the highest annual sales volume since February 2004.

• Houses remain the most sought-after type of residential property with annual values growing by 15.6% vs. 6.8% for units.

Eliza Owen, CoreLogic’s Head of Research for Australia, explains what’s driving this level of demand:

“In May, the unemployment rate fell to 5.1%, and the underutilisation rate fell to 12.5%, the lowest level since February 2013. Consumer confidence remained elevated through June, although down from the recent April highs. Elevated savings accumulated through COVID-restrictions last year, along with a more confident consumer sector, has encouraged consumption of larger goods, such as housing. This has all occurred against a back-drop of continued low mortgage rates, which is one of the most significant demand drivers.”

What’s this about the heat coming out of the market?

• While well above the decade average of 0.4%, the 1.9% growth in June is actually down 30 basis points from May 2021, and down 90 basis points from a peak in March 2021.

• Dwelling value growth might also be softening in certain areas. Take Perth— between January and May 2021, monthly growth rate in values had averaged 1.4%, but fell 0.2% through June.

• Finally, the only capital city to see a further increase in the monthly growth rate was Canberra, where dwelling values were 2.3% higher in June, compared with a 1.7% gain in May.

All dwellings	Auctions	Clearance rate	Private sale	Monthly home value change
VIC	666	85%	1487	▲ 1.47%
NSW	429	91%	1730	▲   2.58%
ACT	46	96%	62	▲   2.35%
QLD	110	64%	1378	▲   1.93%
WA	3	67%	697	▲   0.16%
NT	0	0%	17	▲   0.83%
TAS	1	100%	169	▲   3.01%
SA	59	95%	376	▲   1.64%

With the latest COVID-19 lockdowns, it’s unclear how the property market will perform in July. But with the spring buying season just around the corner and a potential rebalancing of the market, anything is possible.

If you’re considering buying in this market, get in touch with us now to arrange your home loan pre-approval, so you can act quickly and negotiate with confidence when the right property comes up. Give us a call to chat about your plans.

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