Australia Housing Boom Builds as Prices Soar Most Since 1988
Australia’s housing boom ramped up in March as the nation’s economy and labor market continue to recover strongly from the pandemic.
Nationwide house values surged 2.8% in March, the largest increase since October 1988, CoreLogic Inc. data released Thursday showed. Sydney led the appreciation, surging 3.7% last month and up 6.7% over the first quarter.
“The last time Sydney housing values recorded a quarterly trend this strong was in June/July 2015,” said Tim Lawless, head of research at CoreLogic. “Following this brief surge, the pace of growth rapidly slowed as limits on investor lending kicked in to slow the market.”
The rise in property prices has been fueled by record low borrowing rates, an improving economic outlook, an under-supply of new houses and government incentives. Goldman Sachs Group Inc. expects prices to climb 15% over the next two years as people search for bigger homes, with more space to work in, amid rekindled fears of buyers missing out.
While housing prices are climbing from Singapore to Canada and the U.S., a return to boom times in Australia threatens to swell an already worrisome pile of household debt and make it harder for young people to buy their first home. Australia’s prudential regulator is considering possible measures it can take to cool prices to rein in excessive risk taking.
“We think some macroprudential policy tightening will be put in place in the second half of the year,” said Diana Mousina, a senior economist at AMP Ltd.
©2021 Bloomberg L.P.