House prices in Australia hit an all-time high last month. Housing prices, especially in large cities, soared as strong demand met supply shortages amid ultra-low interest rates.
According to Real Estate Consulting CoreLogic on the 1st, housing prices in Australia rose 2.2 percent last month from the previous month, higher than the 1.8 percent increase in April. Compared to a year ago, the figure rose 10.6 percent and jumped 7 percent in the three months of February and May alone.
Sydney rose 3 percent, up more than 9 percent in the past three months alone. Melbourne rose 1.8 percent, Brisbane 2.0 percent and Adelaide 1.9 percent.
“As the economic environment improved and low interest rates continued, strong demand for housing continued to form in support of consumer confidence,” said Tim Loris, research director at Corelogic. “At the same time, the sale was way below average,” he said.
However, overheating of real estate has backfired on consumer confidence and assets. According to the Australian National Statistical Office, housing prices across the country rose by $258 billion to $7.7 trillion in the fourth quarter of last year.
The Reserve Bank of Australia (RBA) repeatedly signaled to the market that the benchmark interest rate would remain at an all-time low of 0.1% until 2024, continuing to increase demand for housing due to prolonged low interest rates.
However, the RBA predicts that the housing market will eventually cool down as border closures slow population growth and supply expands. So far, however, the momentum in Australia’s real estate market has been strong. Home sales are 37% higher than the average over the past five years.
