Australia home prices heat up as super-low rates stoke demand

[SYDNEY] Australian home prices sped higher across all the major cities in November as record-low interest rates fuelled demand from first-time buyers, providing a welcome windfall to consumer wealth and confidence.

Regional prices also boasted sizeable gains as city dwellers still smarting from coronavirus lockdowns sought more living space and houses with gardens.

"If housing values continue to rise at the current pace we could see a recovery from the Covid downturn as early as January or February next year," said CoreLogic's head of research, Tim Lawless.

That would be a remarkable turnaround from the depths of the lockdown in April when analysts were predicting price falls of 10 per cent or more this year and next.

Data from property consultant CoreLogic out on Monday showed national home prices rose 0.8 per cent in November, twice the gain seen in October. Values were up 3.1 per cent on November last year.

Prices across the major capitals rose 0.7 per cent in November, from October, lagging a 1.4 per cent jump in the regions.

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Sydney managed a gain of 0.4 per cent, while Melbourne broke a string of falls to rise 0.7 per cent as the city reopened from a marathon lockdown.

The recovery was led by cities that have been largely Covid-free for some time. Values climbed 1.9 per cent in Darwin and Canberra; 1.3 per cent in Adelaide; 1.1 per cent in Perth and 1.4 per cent in Hobart.

Prices also hit record highs in Brisbane, Adelaide, Hobart and Canberra.

The gains were concentrated in houses where prices rose 1.1 per cent in the three months to November, while apartments fell by 0.6 per cent amid restrictions on international tourism and migration.

The rebound in values is a boon to consumer spending power given Australia's housing stock was already valued at a heady A$7.2 trillion (S$7.09 trillion) in September.

The Reserve Bank of Australia has indirectly supported residential demand by cutting rates to just 0.1 per cent and driving mortgage rates to all-time lows.

REUTERS