Home values in Australia are rising at their quickest rate in 17 years.

It's official: Australia's property market is booming across the board, with the national home value rising 2.1 % in February, the highest monthly increase since 2003.

Since Guy Sebastian robbed Nollsie to win Australian Idol, Roger Federer won his first of 20 grand slams (against the Scud at Wimbledon), and people predominantly used their mobile phones to make calls, we haven’t witnessed such rapid growth (well, and play Snake).

A combination of record low mortgage rates, better economic conditions, government incentives, and low advertised supply levels fueled the February increase, according to CoreLogic’s national house value index.

What areas have seen an increase in growth?

That is, after all, the astonishing thing.

The remarkable and broad nature of this housing upswing was highlighted by the fact that home values climbed in each capital city and rest-of-state region.

A synchronised growth phase like this hasn’t been seen in Australia in more than a decade, according to CoreLogic’s research director Tim Lawless.

“The last time we had a continuous period of growing property values in every capital city and rest-of-state region was from mid-2009 to early 2010, when post-GFC stimulus drove buyer demand,” Mr Lawless adds.

So, which areas fared the best?

Sydney and Melbourne were among the best-performing markets in the month, with property prices rising 2.5 % and 2.1 %, respectively, making up for their weaker performances throughout 2020.

The quarterly trend, on the other hand, favors smaller cities, such as Darwin (up 5.5 % in three months), Hobart (4.8 %), Perth (4.2 %), and Canberra (4.2 %) (3.7 % ).

Mr Lawless adds that it’s too early to tell whether Sydney and Melbourne will be able to maintain their newfound prosperity.

“Both cities are still recording values below their previous peaks, but at this present rate of increase, Australia’s two most expensive capital city markets will be pushing through new record highs in no time,” he says.

“With household incomes anticipated to remain low and stimulus winding down, affordability in these places is likely to become a concern once more.”

The number of new home loans is increasing, yet the federal funds rate stays unchanged.

There were two additional noteworthy pieces of news this week that should be noted by prospective borrowers and refinancers.

To begin with, according to the Australian Bureau of Statistics, new house lending totaled $28.75 billion in January, up 44 % over the same month a year ago in seasonally adjusted terms.

According to the ABS, this is a record high, and it reflects the present record low interest rates.

Meanwhile, during their March meeting, the Reserve Bank of Australia (RBA) held the official cash rate at 0.1 %.

RBA Governor Philip Lowe has declared again again that he does not expect the economic conditions necessary to raise the cash rate will be realized until at least 2024.

However, if the prudential regulator (APRA) does not establish lending caps to help temper the rising housing market, a growing number of economists believe he will be obliged to reconsider his mind.

With that in mind, if you’d like to learn more about your borrowing or refinancing alternatives in the present lending landscape – before any prospective changes – contact us immediately.

We’re here to assist you with any home loan or refinancing issues you may have.

To learn more, contact Premium Finance Group Australia at (07) 4720 8888 or email us at finance@pfga.com.au

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