AUSTRALIA has recorded its highest rate of house price growth since 2003, ranking 7th for overall annual house price growth globally.
According to Knight Frank’s Global House Price Index for Q2 2021, in the 55 countries and territories tracked, prices have grown by 9.2% on average as the pandemic induced housing boom.
“Scarcity remains the key driver for the significant growth in residential values across Australia, with pent-up demand from those engaging in an incredibly low interest rate environment,” said Michelle Ciesielski, head of residential research at Knight Frank.
With Australia recording a 16.4% increase for the year, almost double it’s the rate in the first quarter of 8.3%, the country also moved up more than ten places in global ranking, from 18th to 7th compared to last quarter.
Both its growth rate and ranking is also significantly improved from this quarter in 2020, where the country ranked 19th and recorded 6.1% of annual growth.
“Analysis of the Australian residential market often acknowledges inconsistencies from city-to-city, but currently we are seeing consistent double-digit annual growth in each capital city, although underlying factors do differ as you dive into each market,” said Ciesielski.
Each capital city in the country recorded growth in annual sales volume, with an average increase of 30%. At the same time properties also stayed on the market for significantly less time, dropping 24% when compared to 12 months ago, a reduction equivalent to 29 days.
“If our economy was in a more stable position with this performance, we may have seen the delayed APRA revised lending standards brought forward, but for now, Australian homeowners are watching their property values rise at the fastest rate since 2003,” said Ciesielski.
Ciesielski also highlighted that the current lending market is more responsible than at previous points of growth.
In early 2019, when lending restrictions were enforced to manage the market, Australia placed last on the Global House Price index for three quarters, with growth falling on average by 6.6%.
“Back then, it was Sydney and Melbourne which influenced the overall growth in Australian property prices, ultimately leading to the more responsible lending regime. Now we are experiencing more activity in the smaller capital cities driving up this Australian residential growth,” said Ciesielski.
Globally, Turkey recorded the highest rate of annual growth at 29.2%, with 33% of all markets recording growth in excess of 10%, with only India and Spain seeing declines.