• The value of Australia’s housing stock grew more than $2 trillion in 2021 to almost $10 trillion
  • Dwelling values exploded by more than $512 billion in the December quarter alone, the ABS said
  • The data acts as more evidence of an affordability crisis deterring Australians from settling down

 

 

The nation’s housing stock is now worth a shade under $10 trillion after the largest annual surge in property values the Australian Bureau of Statistics has ever recorded.

In a fresh tranche of data detailing the real estate sector’s harrowing rise, the ABS on Tuesday stated the combined value of Australian dwellings rose more $2.01 trillion over 2021 to $9.9 trillion.

The value of Australia’s housing stock grew more than $512 billion in the December quarter alone, the ABS said.

Hobart saw the biggest increases over the calendar year, with dwellings in the southernmost capital growing in value by 29.8%.

Canberra followed close behind, with a 28.8% increase, followed by Brisbane, Sydney, and Adelaide, none of which saw growth below 24%.

Melbourne properties ‘only’ grew in value by 20%, which was still enough to mark the largest annual value increase since the June quarter of 2010. Perth (15.7%) and Darwin (13%) rounded out the capital cities.

Evened out, the mean price of Australian capital city dwellings grew $44,000 to $920,100 in the December quarter.

While those figures tell the story of rock-bottom interest rates and a slew of government incentives designed to shield the construction sector from the impacts of COVID-19, turbulence lies ahead.

Although investor loan commitments soared to record highs in January 2022, the number of new loan commitments from first home buyers fell 6.9% over the month, and collapsed 32.6% from January 2021 levels.

The proportion of an average home owners income required to service a mortgage also grew to 37% in the December quarter.

The decline in first home buyers and ballooning mortgage serviceability costs suggest Australians are being priced out of owning property, the Real Estate Institute of Australia wrote last week.

If buyers say enough is enough, analysts believe the market could turn. ANZ last month predicted prices could rise 8% in 2022 before falling 6% in 2023, as a result of rising interest rates, beefed-up lending guardrails, and mounting affordability concerns.

But even if buyers baulk at market conditions, supply-side pressures could keep prices inflated.

The war in Ukraine has jolted the cost of construction materials worldwide, with builders likely to pass those costs on to consumers.

The mass destruction of homes as a result of recent flooding in northern New South Wales and Queensland could also elevate prices in hard-hit regions, compounding the devastating natural disaster with a renewed affordability crisis.

This article first appeared on Business Insider Australia, Australia’s most popular business news website. Read the original article. Follow Business Insider on Facebook or Twitter.

Read MoreProperty

You might be interested in