Add CategoryThe total value of Australia’s residential housing market has soared to $10.7 trillion, locking out aspiring first-home buyers unable to keep pace with rising property prices.
New data released Tuesday by the Australian Bureau of Statistics found the combined value of Australia’s 11,176,100 residential dwellings rose by $209.4 billion to $10.72 trillion in the first three months of the year, despite elevated interest rates and a cost-of-living crisis.
That’s more than the total value of Australia’s superannuation, listed share market and commercial property markets combined.
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The value of Australia's residential market hit a new high in the March quarter 2024. Picture: Getty
The average price of residential dwellings rose by $14,300 to $959,300 in the March quarter, with the total value of residential dwellings rising in all states and territories.
The rising property market has boosted confidence for both buyers and sellers, with PropTrack data showing auction clearance rates remain robust despite a sharp jump in the number of homes hitting the market this year.
PropTrack senior economist Eleanor Creagh said strong buyer demand is absorbing the uplift in new home listings, fuelling further price growth.
“A housing supply shortfall matched by strong demand is outweighing the impacts of higher borrowing costs and stretched affordability,” Ms Creagh said.
While borrowing capacity has fallen in line with higher interest rates – which have risen 13 times since May 2022 – Ms Creagh said expectations for further price growth was continuing to spur on activity.
“Ongoing home price rises are likely incentivising many to overcome affordability challenges and transact with the expectation of continued growth,” she said.
“As a result, home prices have remained resilient to the higher interest rate environment.
“However, in every capital city the pace of home price growth has slowed since the stronger pace seen through the summer selling season earlier this year.”
According to PropTrack, home values across the country reached a record high in May, with prices now up 6.7% over the past year and as much as 20% in some property hotspots.
Perth's property market is booming. Picture: Getty
Dwelling values in Perth – the best performing capital city – have soared 20.6% over the past 12 months, while Brisbane is now the equal-second priciest capital city.
Several regional cities have also experienced double-digit price growth, particularly in Western Australia and Queensland.
As property prices continue to rise, homeowners who had put their purchasing plans on hold appear to be jumping back into the market.
A recent survey from Mortgage Choice signals a busy end to the year, with 57% of prospective buyers saying they delayed deciding to buy until 2024.
Mortgage Choice chief executive Anthony Waldron said brokers are reporting a sense of ‘cautious optimism’ from customers motivated to act on their property plans.
“Paired with the continuing momentum we’re seeing for new purchase loans, we anticipate stronger demand in the months ahead,” Mr Waldron said.
First-home buyers are facing an uphill battle, but many are compromising on location or home features to get into the market. Picture: Getty Images
ABS data released last week showed a sharp lift in home lending, with the value of owner occupier home loans up 19% compared to a year ago, while investor lending surged 36% year-on-year.
While the number of first-home buyer loans remains well down from the pandemic-peak, they have been trending higher this year as more people look to escape the tight rental market.
Sydney buyer’s agent Michelle May said while worsening affordability was a barrier, it wasn’t necessarily a ‘death blow’ to first home buyers’ aspirations.
“It’s hard to find a silver lining when confronted with such a dire set of facts, but there are strategies first-home buyers can use to keep their eye on the prize,” Ms May said.
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“The goal is to simply get their foot in the door, build equity, and free themselves from the rental market.
“To do so first-home buyers need to acquaint themselves with a new set of facts: that the dream of a freestanding block with a quarter acre yard is long gone and trendy urban areas are also likely to be out of reach.”