DRising eas, taxes and home prices. The latest home price data shows that the coronavirus recession has continued to skyrocket nationwide after the June quarter plunge last year, with little impact on home prices.
Perhaps the most important aspect of Morrison’s economic response to the pandemic was, above all, to keep house prices rising. But to be fair, this has been a top priority aspect of economic policy for decades in Australia, especially since John Howard was elected.
Therefore, rather than using the recession as a time to promote public works or renewable energy projects (forbidden by God), the government’s “Home Builder” policy has focused on subsidizing private housing construction. I did.
This is also the underlying response of many state governments, as well as this week in New South Wales. Announced $ 25,000 First Home Buyer Grant..
Alongside all the house prices, we’ve seen the strongest quarterly home growth for over a decade in the first three months of the year.
House prices across the Australian capital rose 5.4% in the first quarter of this year. This is the largest growth since December 2009, when the Rudd government has done everything it can to sustain price increases during the GFC.
The average price increase of 7.5% is not record, but it is expected to increase by an average of about 18% per year by September, as prices have risen rapidly over the last six months.
This year’s prices were led by Hobart, Canberra and Sydney, but all capitals are showing strong growth.
Will prices continue to rise? There is no reason not to think.
Looking at the relationship between home finance growth and home prices, the surge in mortgages suggests that prices continue to rise nationwide.
If the relationship between mortgages and home prices is maintained in Sydney by September, the annual growth rate of home prices is close to 17% from the current 8%, given that mortgages are growing at around 42%. Will be.
But the story of the recent price boom is also one of homes vs. apartments.
In all capitals, the prices of established homes are rising significantly faster than the prices of attached homes.
In Sydney, apartment prices have risen by just 2.8% over the past year, compared to 10.8% for homes.
As a result, the median home prices across the country are at or near record levels. In March of this year, the median home price in Sydney was $ 1.05 million. It was also the first March quarter since 2012, with a median higher than the previous quarter.
In December 2019, Melbourne’s median home price hit a record high of $ 760,000. A new record of $ 824,500 was set in the March quarter of this year.
However, there is no record increase in apartment prices.
This is nothing new. Since the Reserve Bank began cutting rates at the end of 2011, the price surge has been about housing, not apartments.
In Melbourne, for example, established home prices are 62% higher than at the end of 2010, while apartment prices are “slightly” up 27%.
The main reason is that the low interest rates of 2010-2016 spurred an unprecedented large-scale apartment building boom.
This big price cut and government subsidies have boosted housing construction, but apartments are only being built at about the same rate as they were ten years ago.
Will this increase in buildings bring price easing as supply approaches demand? For now, this is unlikely – the increase in homebuilding is strong, but not a major departure from the blow of the past.
Therefore, government policies that continue to increase demand for homes are set to always do what they intend, whether they buy an established home or build a new one. Seems to-continue to raise house prices.
House of Cards: Australia’s main response to the Covid recession was to keep home prices soaring.Greg Jericho
Source link House of Cards: Australia’s main response to the Covid recession was to keep home prices soaring.Greg Jericho