Home values are still rising at their fastest pace in more than 30 years despite lockdowns in Australia’s two biggest cities and the foot coming off the pedal over the past six months.
They jumped another 1.5 per cent in September, bringing the total increase for the first nine months of the year to 17.6 per cent, according to Corelogic.
Nationally, home values have soared by 20.3 per cent over the past 12 months to a median of $676,848, which is up $8334 from last month.
The annual growth rate is now tracking at its fastest pace since the year ending June 1989.
But while the market conditions remain positive, the monthly growth rate is continuing to lose steam and ease back from its peak of 2.8 per cent in March.
Corelogic research director Tim Lawless said worsening affordability—with increasingly higher barriers to entry for non-homeowners and fewer government incentives—was slowly putting the brakes on growth rates.
“With housing values rising substantially faster than household incomes, raising a deposit has become more challenging for most cohorts of the market, especially first home buyers,” he said.
Lawless said a prime example was Sydney, where the median house value at just over $1.3 million now means the typical buyer needs around $262,300 for a 20 per cent deposit.
“The slowdown in first home buyers can be seen in the lending data, where the number of owner-occupier first home buyer loans has fallen by -20.5 per cent between January and July,” he said.
“Over the same period, the number of first home buyers taking out an investment housing loan has increased, albeit from a low base, by 45%, suggesting more first home buyers are choosing to ‘rent vest’ as a way of getting their foot in the door.”