Australia's March home prices surge at fastest pace since 1988

[SYDNEY] Australian home prices rose at the fastest pace in three decades in March as the prospect of years of record-low interest rates stoked red-hot demand amid a wide scale shortage of available property, particularly detached houses.

The barnstorming recovery in the housing market follows a Covid-19-led crunch early last year and provides a much-needed windfall to consumer wealth and confidence.

Australia's statistician estimates the value of homes rose A$258 billion (S$263.6 billion) in the December quarter to hit A$7.7 trillion, and that was before the latest sharp gains.

Thursday's report from property consultant CoreLogic showed national home prices jumped 2.8 per cent in March, on top of a 2.1 per cent increase in February. It was the biggest rise since October 1988 and left prices up 6.2 per cent on a year before.

Houses were again in demand with a rise of 3.0 per cent in March, beating a 1.9 per cent gain for apartments.

Sydney led the charge with a blistering gain of 3.7 per cent in March, and 6.7 per cent for the entire first quarter. Prices in Melbourne and Brisbane rose 2.4 per cent, with Perth up 1.8 per cent.

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The major cities also pulled ahead of the regional market, which had been benefiting from an exodus of city dwellers seeking more living space and gardens.

Buyers have been encouraged by the outlook for borrowing costs, with the Reserve Bank of Australia (RBA) repeatedly saying rates were likely to remain at an historic low of 0.25 per cent until at least 2024.

There has also been a lack of supply with advertised stock levels in March 25.5 per cent below the five-year average.

"For every new listing added to the market, 1.1 homes are sold," said CoreLogic's head of research, Tim Lawless. "Such a rapid rate of absorption is keeping overall inventory levels low and adding to a sense of FOMO amongst buyers."

REUTERS