Australia home prices keep rising even as Sydney locks down

[SYDNEY] Australian home prices motored ahead in July even as a coronavirus lockdown in Sydney curbed auctions, though stretched valuations could make affordability more of a drag in the longer term.

Data from property consultant CoreLogic out on Monday showed national home prices climbed 1.6 per cent in July from June, when they rose 1.9 per cen.

Prices were up 16.1 per cent on last year, the fastest annual pace since 2004, with houses surging 18.4 per cent amid a pandemic-driven shift to working from home.

A lockdown did nothing to stop Sydney gaining another 2 per cent in the month, to be up 18.2 per cent on a year ago. Melbourne added 1.3 per cent, Brisbane 2 per cent and Adelaide 1.7 per cent.

Prices across the major cities grew 1.6 per cent in July, while the regions rose 1.7 per cent.

"Dwelling sales are tracking approximately 40 per cent above the five-year average while active listings remain about 26 per cent below the five-year average," said CoreLogic's research director, Tim Lawless.

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"The mismatch between demand and advertised supply remains a key factor placing upwards pressure on housing prices."

The red-hot market has provided a huge windfall to consumer wealth and confidence. The Australian Bureau of Statistics estimates the value of homes rose a record A$450 billion (S$447.48 billion) in the March quarter alone to reach A$8.3 trillion.

However, with the average home in Sydney now above A$1 million prices were looking stretched.

"With dwelling values rising more in a month than incomes are rising in a year, housing is moving out of reach for many members of the community," said Mr Lawless.

Buyers have still been encouraged by the outlook for super-low borrowing costs, with the Reserve Bank of Australia saying rates were likely to remain at just 0.1 per cent until 2024.

Regulators, however, have been warning banks not to loosen lending standards and analysts suspect they could tighten loan rules later this year if the market stays this hot.

REUTERS