Why Australian Property Prices are Breaking Records Despite Lockdowns
Posted by Tristan Angelini on 04 August 2021
The impact of the coronavirus has disrupted the natural flow of our daily lives. Industries around the world are also learning how to adapt to the change brought by this invisible enemy. With the new variants emerging, cases could spike up again which means lockdowns could be an order. Recently, some states in Australia like Victoria and Sydney went on a lockdown to prevent the virus from spreading even more. Because of this, it would make sense why industries could be worried about its effects. But as for the property industry, seems like record highs are recorded.
According to newly released data, several cities are recording record highs in terms of Australian property prices. This is considered the fastest pace in 17 years with a 16.1 percent increase over the past year and with a median of $656,694. This data was released by the latest Core Logic Home Value Index. The majority of the recorded growth is from this year with 14.1 percent over seven months.
What's really surprising about these figures is that it's the strongest annual growth recorded since 2004. However, the monthly growth rate has slowed down early this year.
So, what has caused these demand conditions?
Experts are saying that there are a few things that fueled this situation. Remember the first home buyer loan deposit scheme? Experts are pointing out that initiatives really played a huge role in this situation. Initiatives like the first home loan scheme and the homebuilder grant really contributed to this. Plus, other factors that played a part include low mortgage rates, low unemployment rate, and savings accumulated due to the lockdowns and restrictions imposed last year. There has also been a huge increase in confidence among consumers plus the limited advertised housing stock played a huge part as well.
From July 1, an additional 30,000 places were released by the Federal Government under the said schemes for the eligibility of single parents with children to build a new home or purchase an existing one. The great thing about the scheme is that it allows deposits as little as 2% which could be very enticing among these individuals.
However, according to data released by CoreLogic, not all states are enjoying the perks. Seems like there has been a loss of momentum and no growth rate can be seen in Perth and Darwin for the first time in nine months. This could be because of the recent lockdowns in various cities.
The restrictions that have been imposed definitely limited activities and some vendors are holding off their listings until the restrictions are eased. This affected buyers who want to transact even with the current situation. COVID has had a huge impact on the available supply, but in terms of buyer interest, the demand is even bigger.
The rise in house prices in Australia is a good thing among vendors. They get wealthy even during the pandemic. Unfortunately, according to experts, housing affordability remains an issue because of these house prices increase. While it is true that for those who own a home, it's actually good news. But the real problem lies with those who do not have their own place to stay. Lower-income families have been having a hard time paying mortgages or rent. But for those who are planning to venture into the property, now is indeed a good time to go for it.