NAB’s Chief Economist, Alan Oster provides his thoughts on the Australian and Global economy.
The national home value index recorded a 2.8% rise, the fastest rate of appreciation since October 1988.
The heat in the housing market intensified last month, with our national home value index recording a 2.8% rise, the fastest rate of appreciation since October 1988 when values were up 3.2% over the month. These exceptionally strong growth conditions remain broad-based, with values rising by at least 1.5% across each of the capital cities over the month.
Sydney led the pack for capital gains, with values surging 3.7% over the month and 6.7% higher over the first quarter of the year. The last time Sydney housing values recorded a quarterly trend this strong was in June and July 2015. Following this brief surge, the pace of growth rapidly slowed as limits on investor lending kicked in to slow the market.
March marked several inflection points across the market. Sydney and Melbourne have now staged a full recovery from earlier downturns. With the acceleration in capital gains across Australia’s two largest housing markets, the larger capitals have started to outpace many of the smaller cities that were previously leading the charge in growth.
Additionally, for the first time in a year, growth in capital city housing values outpaced the regional markets. CoreLogic’s combined capital cities index recorded a 2.8% lift in March compared with the 2.5% gain seen across the combined regionals index. Housing values in regional areas are 11.4% higher over the past year, demonstrating the higher earlier stronger growth trend. Capital city values are now 4.8% higher on an annual basis with an acceleration in growth evident in March.
Victoria was the only state where regional housing values rose at a faster pace than their capital city counterparts. Regional Victorian values were up 2.6% compared with a 2.4% rise across Melbourne over the month.
Lower density housing has continued to outpace higher density housing for capital gains. Nationally, house values were 3.0% higher over the month while unit values were up a more modest 1.9%. Across the combined capitals, the quarterly growth rate for houses, at 6.5%, is more than double that of units at 3.1%. Despite the underperformance, it looks although unit markets have turned a corner, with Sydney recording two consecutive months of rising values, while the Melbourne unit market has seen values consistently rising since October last year, with the trend accelerating over recent months.
At the heart of these strong housing market conditions is a disconnect between demand and supply.
Find out the latest news for each capital city by clicking the link and watching the videos below or read the full Australian housing market update April 2021 transcript.
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