Australia has just recorded its highest rate of annual price growth since 2003, at 16.4 per cent.
The latest report from Knight Frank, the Knight Frank Global House Price Index Q2 2021, has confirmed what many of us have recently seen; just how quickly the Australian property market is rising.
In the last six months alone – from Q4 2020 to Q2 2021 – Australian property values went up by 10.6 per cent.
Over the three months to June 2021, prices rose by 5.1 per cent.
Australia’s double-digit increases were highlighted as a headline figure by the report’s authors, who had noted that the 16.4 per cent figure “is the country’s highest rate of annual price growth since 2003”.
That price increase places Australia in seventh place on the ranking, which looks at price growth among 55 countries and territories around the world on a quarterly basis.
According to Knight Frank, across the 55 countries and territories included in the report, prices rose by 9.2 per cent over the year to June 2021 – thanks to a widespread, pandemic-induced housing boom.
Turkey took out the top spot – recording 29.2 per cent growth over the 12 months 20 June 2021.
New Zealand came in second place for the period, witnessing a 25.9 per cent increase to property values over the period.
United States came in third, with 18.6 per cent, while Slovakia (18.6 per cent), Sweden (17.2 per cent) and Luxembourg (17 per cent) took out fourth to sixth places respectively.
India and Spain were the only two markets included in the survey that did not see price growth over the period. It’s the lowest proportion of markets to register a pricing decline since the Global House Price Index commenced back in 2008.
So, what’s different about this boom?
Taking a closer look at the Australian property market, Knight Frank’s head of residential research, Michelle Ciesielski, indicated that “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”.
She said despite the fact that the Australian residential market does usually see inconsistencies from city to city, Knight Frank is currently seeing “double-digit annual growth in each capital city – although underlying factors do differ as you dive into each market”.
Other leading indicators support this finding: analysis at the end of June 2021 revealed that every capital city in Australia recorded an upward trajectory in annual sales volume, with a 30 per cent average, whilst the number of days a property was listed on the market has fallen by 24 per cent over the past year – the equivalent to having 29 days shaved off the average Australian property listing.
According to the residential research head, “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.”
Even with the boom-time conditions, Ms Ciesielski said the current property landscape is quite different compared to the situation facing Australians 17 years ago.
Highlighting that Australia’s lending environment has become “considerably more responsible” since this time – she acknowledges that it has had an impact.
“The last time tighter lending restrictions were enforced to cool the market, Australia slipped down into last place on the Global House Price Index in early 2019 for three consecutive quarters, with annual growth falling by an average of 6.6 per cent.
“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.”