‘Extraordinary’ growth in house prices

Australian residential property prices hit fresh record highs last month amid deepening fears affordability is slipping from the grasp of many.

Australia is in the midst of yet another housing boom with a synchronised surge in property prices across capital cities and regional areas, a seasoned economist has declared.

The latest CoreLogic data released on Thursday shows national home prices jumped 2.8 per cent last month – the most since October 1988 – to fresh record highs.

CommSec senior economist Ryan Felsman described monthly home price gains across capital cities as “extraordinary”, with records tumbling in March.

Sydney was the strongest performer, soaring 3.7 per cent – the most since August 1988.

In second place was Hobart, up 3.3 per cent – the most since October 2003.

The most modest gains were in Adelaide, but even there property prices lifted 1.5 per cent – the most since December 2007.

Over the year, national home prices soared 6.2 per cent, the CoreLogic data shows.

But the most impressive figure was for regional home prices, which became 11.4 per cent more expensive over the year to March – the strongest annual growth rate since July 2004.

“The property market is booming, fuelled by record low borrowing costs, HomeBuilder stimulus and a low supply of homes listed for sale amid surging demand,” Mr Felsman said.

“Home lending and building approvals are broadly around record high levels.”

However, it was looking increasingly likely some macroprudential policy tightening would cool the housing market later this year or beyond, he said, as affordability slipped out of many Australians’ grasp.

The banking sector regulator, the Australian Prudential Regulation Authority (APRA), has signalled along with Reserve Bank governor Philip Lowe that it is keeping a close eye on property market developments.

But Dr Lowe has put the onus on banks to maintain lending standards, insisting the central bank will keep interest rates at their current record low of 0.1 per cent until at least 2024.

Mr Felsman noted APRA chairman Wayne Byres said earlier this week the regulator was “giving careful thought to which tools might work” to rein in excessive risk taking in the housing market.

The CoreLogic data shows houses continue to outperform apartments, with the average Australian capital city house price last month reaching $747,639, while the average unit price was $592,154.

Research released by the federal government’s National Housing Finance and Investments Corporation on Friday noted the affordability problems flowing on to renters.

It estimates that in Sydney and Hobart, zero to 10 per cent of homes are considered affordable for the bottom 40 per cent of renters on low incomes.

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