Australia’s home prices climb further as rental growth refuels
Darwin is once again the top gainer, advancing 2.2%, while the Sydney market rose by 0.6%
[CANBERRA] Australian home prices climbed for a sixth straight month with every major city reporting gains, while signs of resurgent rents are set to stretch the budgets of households in this segment.
The Home Value Index advanced 0.6 per cent in July, property consultancy Cotality said in a statement on Friday (Aug 1).
Darwin was once again the top gainer, climbing 2.2 per cent, while the bellwether Sydney market rose by 0.6 per cent.
“The outlook for housing values remains positive,” Cotality said in its report.
“We expect values to continue posting a broad-based but modest rise through the rest of the year, supported by an outlook for lower interest rates, improving sentiment and short housing supply,” it said.
Money markets are pricing a rate cut at the Reserve Bank’s meeting this month as almost certain after inflation data released two days earlier showed an across-the-board cooling of price pressures.
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Still, Cotality highlighted affordability constraints and lingering uncertainty as constraints to a more rapid uptick in property prices.
On the flip side, a persistent lack of supply is supporting home prices alongside expectations of further rate cuts.
In the past three months, national house values have risen by 1.9 per cent, adding approximately US$10,800 to the median value.
Data to March show the national dwelling value to household income ratio, at 7.9, is just shy of record highs, according to the report.
Rental vacancy rates are also holding close to historic lows, at 1.7 per cent nationally in July, Cotality said.
The firm added that there has been some evidence of quickening growth trends.
“The reacceleration in rental growth is clearly bad news for renters, where the median income household would already need around a third of their pre-tax income to pay rent,” said Tim Lawless, research director for Cotality, formerly CoreLogic.
“Renting households have historically skewed to younger, lower-income cohorts, so no doubt the sting of high rents is having an even more acute impact on household budgets.” BLOOMBERG
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