Australian home prices climb for seventh month after rate cuts
The government has an ambitious target of 1.2 million new homes by 2029
[SYDNEY] Australian home prices advanced for a seventh straight month, fuelled by lower borrowing costs and a supply shortfall in major cities.
The Home Value Index rose 0.7 per cent in August, property consultancy Cotality said on Monday (Sep 1). Brisbane’s 1.2 per cent increase was the top monthly gain while bellwether Sydney climbed 0.8 per cent.
“The growth cycle has been gradually building momentum” since the Reserve Bank of Australia’s (RBA) February interest-rate cut, Cotality said in its report. It also cited real wages growth, improved confidence and tight advertised stock levels.
Australia has some of the costliest housing in the world, an affordability challenge exacerbated by near-record rental prices. The government has an ambitious target of 1.2 million new homes by 2029. It has also widened a programme for first-time buyers to purchase a property with a deposit of just 5 per cent.
Such demand-side initiatives “tend to lift home prices” because of the difficulty and time needed to add housing supply, Diana Mousina, deputy chief economist at AMP, wrote in a note on Friday.
Home prices have risen 1.8 per cent nationally in the past three months, taking the median value to A$848,858 (S$713,045), compared with US$1.22 million in Sydney alone.
The national rental vacancy rate was close to historic lows at 1.5 per cent in August, Cotality said. Rental growth “could gradually place some upwards pressure on inflation” if it continues, said Tim Lawless, research director for Cotality, formerly CoreLogic.
Money markets are pricing in two more RBA rate cuts by May next year to add to the three reductions so far in 2025. BLOOMBERG
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