The value of Australia's housing market has reached a new high in September, surpassing the $9 trillion mark.

CoreLogic's latest market update showed the valuation of the residential real estate market hit a new record high at $9.1tn.

CoreLogic head of research Eliza Owen said the consistent capital gains across the country boosted the lift in the overall value of the housing market, which is now 28.2% higher than the estimated value of superannuation, the ASX, and commercial real estate combined.

"The increase in value has coincided with national house values reaching $719,209 over September, and units sitting at $586,993,” Ms Owen said.

“The Australian dwelling market increased 20.3% in the year to September, which is the highest rate of annual appreciation since June 1989.”

Based on how prices are growing on a monthly basis, it's clear that gains are already past their peak of 2.8% in March.

The gradual decline in monthly gains reflect the increasing struggle of many first-home buyers to keep up with the property boom.

"Affordability is an increasing challenge for many segments of the market, but particularly first-home buyers who have not had the benefit of home ownership as a source of wealth through equity generation," Ms Owen said.

How lending policies could impact price growth

Earlier this week, the RBA left the cash rate untouched at its record low of 0.10%.

Ms Owen said while the low-rate environment could still support the growth in house prices, the tighter lending conditions could potentially be a headwind.

"Rising wealth effects and transaction activity associated with high housing demand has likely supported economic conditions throughout COVID-19. 

“However, there is mounting expectation that the housing lending space could see some macro prudential intervention."

Still, Ms Owen believes the recent move by the Australian Prudential Regulation Authority (APRA) to raise the serviceability buffer seems to be a more "subtle” approach to financial stability.

"It is far less likely to move the housing market into negative territory.”

Affordability, consumption — factors to watch out for

CoreLogic research director Tim Lawless said while the overall outlook for the housing market remains positive, concerns on affordability would likely define where prices would go next.

"Growth in housing values is being supported by an expectation that mortgage rates will remain at record lows for an extended period of time," Mr Lawless said.

"This dynamic is changing as the barriers to enter the housing market become higher.

“Raising a deposit and funding transactional costs has become a significant challenge for some sectors of the market."

Consumption patterns will also be a significant factor, particularly in the post-lockdown environment.

Household savings have jumped 22% through the June 2020 quarter amid strict restrictions.

Mr Lawless said the high rate of savings was able to boost the housing demand amid the pandemic.

"With 70% vaccination rates triggering greater freedoms across parts of the country, households may return to more normalised, pre-pandemic consumption patterns and spending, which could further ease housing demand,” he said.

Photo by City of Gold Coast on Unsplash.