The latest data from property consultant CoreLogic revealed that Australian home prices experienced a significant increase in May. This marks the largest monthly gain since October, with national home prices rising by 0.8%. This continuous growth trend over the past sixteen months has resulted in prices being up by 8.3% compared to the previous year.
One of the key factors driving this surge in home prices is the persistent shortage of affordable housing in major capital cities across Australia. Low supply levels have created a situation where demand significantly outweighs availability, leading to a continuous upward pressure on prices. CoreLogic Research Director Tim Lawless noted that despite other economic challenges such as high-interest rates and consumer pessimism, the housing market has shown resilience.
The data also revealed notable price increases in various state capital cities. Perth saw a 2.0% growth in May, followed by Adelaide with a 1.8% rise and Brisbane with a 1.4% increase. These price hikes translate into a median value increase of more than A$12,000 month-to-month. Sydney, Australia’s largest city, experienced a 0.6% growth, reaching a record high comparable to the peak in January 2022. Melbourne and Canberra also witnessed slight price increases in May.
Despite the positive outlook for the housing market, challenges remain. A Reuters poll indicated that Australian home prices are expected to outpace overall inflation in the coming years. The failure of builders to boost housing supply has turned Australia into one of the world’s most expensive housing markets. Inventory levels in major cities continue to remain below average, further exacerbating the supply-demand imbalance.
The Australian housing market continues to demonstrate resilience and strong growth, driven by a shortage of affordable housing and sustained demand. While the surge in home prices may present challenges for buyers, it also highlights the need for innovative solutions to address the housing affordability crisis in the country.