In May, Australian home prices experienced a significant increase, marking the largest monthly gain since October. Data from property consultant CoreLogic revealed that national home prices rose by 0.8%, extending the growth streak to sixteen consecutive months. Compared to April, when prices saw a 0.6% increase, the current figures show a steady upward trend. Year-on-year, prices have surged by 8.3%, reflecting the ongoing demand for housing in the country.
CoreLogic Research Director Tim Lawless attributed the continuous rise in housing prices to the persistent shortage of affordable homes in major capital cities. Despite factors such as high interest rates, cost of living pressures, and negative consumer sentiment, the Australian housing market has remained resilient. Low supply levels have led to a rapid absorption of new listings by market demand, consequently keeping stock levels low and exerting upward pressure on prices.
The shortage of available housing supply has resulted in price surges across state capital cities. In May, Perth witnessed a 2.0% increase, while Adelaide and Brisbane experienced growth of 1.8% and 1.4%, respectively. These price hikes translate to a median value rise of over A$12,000 month-on-month. Sydney, which saw a 0.6% growth in May, has once again reached record highs previously set in January 2022. Despite a 12.4% decline following that peak, prices have rebounded by 14.1%, with the median home value in Sydney reaching close to A$1.16 million. Melbourne and Canberra also saw modest increases of 0.1% and 0.5%, respectively.
A recent Reuters poll indicated that Australian home prices are expected to outpace overall inflation over the next two years. Builders' failure to boost supply has made Australia one of the world's most expensive housing markets. Lawless highlighted that inventory levels remain significantly below average in key markets, despite increased vendor activity compared to the previous year. The persistent imbalance between supply and demand continues to pose challenges for the country's housing market.