Australian House Prices See Significant Surge Amid Tightening Supply
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Australia’s housing market has witnessed a notable increase, with prices surging by 8.3% annually after a continuous six-month climb, according to the latest data from property consultant CoreLogic. This upswing in prices is attributed to a considerable squeeze in housing supply, positioning Australia at 22nd out of 33 OECD countries in terms of housing provision.
In May alone, house prices rose by 0.8%, adding approximately A$12,000 to their value, which is around £6,250. Notably, Perth and Adelaide experienced significant increases during this period, while Sydney’s property prices returned to their peak levels of January 2022, bringing Sydney’s median home value to just under A$1.16 million (£600,000).
Experts like Rachel Ong ViforJ, an economics professor at Curtin University, suggest that the existing strategies to boost housing supply may not be sufficient to make a quick impact on affordability. “New housing supply only adds to the existing housing stock a bit at a time, so it will take a long time for new housing supply to have any positive impact on affordability,” ViforJ explained in an interview with The Sydney Morning Herald.
The professor emphasized the importance of utilizing the current housing stock more efficiently. She proposed providing incentives for empty nesters to downsize and addressing the impacts of short-term rentals, such as Airbnb, which affect the availability of long-term rental properties. “While we can focus on building new houses, we should at the same time try to see how we can make better use of our established dwelling stock,” ViforJ added.
Moreover, ViforJ highlighted the necessity of traditional supply-side solutions, including easing capacity constraints in the sector, increasing government construction of social housing for low-income households, and reforming planning to better facilitate the delivery of a diverse range of new builds.
As outlined by Ryan Bembridge in his coverage, the pressing issue remains the imbalance between the limited supply and the increasing demand, which continues to push prices upward across the nation. The trajectory of Australia’s housing market remains a critical topic for both potential homebuyers and policymakers.
This ongoing situation calls for a multifaceted approach to housing that not only increases supply but also optimizes the existing resources to ensure long-term sustainability and affordability in the Australian housing market.
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