Australia's June home prices rise at their fastest annual pace since 2004

Sydney

AUSTRALIAN home prices rose at their fastest annual pace since 2004 in June as strong demand and tight supply outweighed the drag from coronavirus lockdowns in some cities.

Data from property consultant CoreLogic out on Thursday showed national home prices climbed 1.9 per cent in June from May, when they jumped 2.2 per cent.

Prices were up 13.5 per cent on last year, with houses surging 15.6 per cent amid a pandemic-driven shift to working from home.

Sydney prices gained another 2.6 per cent, to be up 15 per cent on a year ago, while Brisbane added 1.9 per cent and Adelaide 1.6 per cent. Melbourne rose 1.5 per cent even though the city was locked down for much of June.

"This is the highest annual rate of growth seen across the Australian residential property market since April 2004, when the early 2000's housing boom was winding down," said CoreLogic head of research for Australia, Eliza Owen.

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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$453.8 billion) in the March quarter to A$8.3 trillion.

The average home in New South Wales also topped A$1 million for the first time ever.

Buyers have been encouraged by the outlook for super-low borrowing costs, with the Reserve Bank of Australia (RBA) saying rates were likely to remain at just 0.1 p until at least 2024.

Concerns about affordability and lending standards could lead to some tightening in macro prudential rules later this year, with regulators recently writing to banks to warn against complacency.

Yet the RBA has argued that historically low population growth caused by border closures and increased supply will eventually work to temper the market.

CoreLogic's Owen noted there were some early signs of a cool down at the top end of the market, where price growth slowed for the first time in nine months. REUTERS