Why the property market in Australia is so hot right now

upward rise property market

According to CoreLogic’s Hedonic Home Value Index, the national average value of real estate in Australia, the housing property market in particular, rose 2.8 per cent in March to $614,768.

This was the fastest monthly result in 32 years.

Currently, the ratio of sales to new listings is tracking at around 1.1. This implies that for every new listing added to the market, 1.1 homes are sold. According to Corelogic, the national total listing numbers over the four weeks to the end of March show that stock levels were 25.5 per cent below the five-year average.

Unlike previous peaks, investors nor population growth are not the primary drivers of the property market, but owner-occupiers, with record-low interest rates and financing availability.

According to the latest data from the Australian Bureau of Statistics, the total value of new private financing and loan commitments for owner-occupier housing was a staggering $21.7 billion in one month. That’s 55.2 per cent higher than it was in February 2020, which was prior to COVID-19. To put that further into perspective, people were only borrowing $7 billion in 2003 for new home constructions from banks, private lenders, and other financial institutions.

Pressure is building on the Reserve Bank to hose down the white-hot housing market driven by property investors, majority of which are owner-occupiers. Governor Philip Lowe is already laying the groundwork for a new macro-prudential policy for property investors to rein in runaway house prices.