Yes, it’s a boom
Core Logic reports that the current housing boom has increased home values Australia wide by 2.2% in May alone. This totals almost a 7% rise from March to May (9.3% rise in values in Sydney over the same period). The article also reports that of the 334 sub-regions analysed, 97% showed increases in values, which is extraordinary.
Unsurprisingly, The Real Estate Conversation reports that housing affordability has worsened Australia wide slightly in the March quarter. Housing affordability is measured by the average proportion of a person’s income that is required to meet loan requirements. Last year in the March quarter, the proportion had fallen by 0.5% (which increased affordability). This year it has risen overall by 0.1%.
Incredibly, New South Wales and South Australia affordability is reported as improving slightly, but all other states and territories fell. For more information, including the rates of first home buyers taking out loans, have a look at the article.
Despite the rising values and decreasing affordability, Domain discusses a S&P report which states that less mortgages are falling into arrears in March, than in the same month last year. In 2021 this percentage is reported as 0.94%, compared to 1.03% in 2020. The key takeaways of this are that low interest rates and Government stimuli are taking the heat out of many mortgagee repayments, but he downside to these benefits of course has been the commensurate rise in house prices as borrowers always seek to stretch themselves to the limit of what they can afford. It’s probably just as well wages have been flat for so long otherwise who knows what house prices would be doing.