Residences in Sydney, New South Wales. - AFP
SYDNEY: Australian home prices climbed for a fourth straight month, driven by a second interest rate cut by the country’s central bank and expectations more will follow later this year.
The Home Value Index advanced 0.5% in May, with every major city recording a rise, property consultancy Cotality, formerly CoreLogic Inc, said in a statement yesterday.
Darwin was the top gainer, climbing 1.6%, followed by Perth which rose 0.7%. The bellwether market of Sydney was up 0.5% and Melbourne increased 0.4%.
“The continued momentum we’re seeing across almost all markets is no doubt being fuelled by rate cuts, both those that have already happened, but also potential cuts in the coming months,” said Tim Lawless, research director for Cotality.
“With interest rates falling again in May, we are likely to see a further positive influence flowing through to housing values in June and through the rest of the year.”
Financial market pricing implies the Reserve bank of Australia (RBA) will cut three more times this year to bring the cash rate to 3.1%, from 3.85% now.
The national dwelling value was about eight times the household income at the end of last year, highlighting affordability constraints, with home-loan serviceability at an all-time high, the data showed.
A major factor supporting house price growth across the country is a chronic under-supply of homes.
The newly re-elected government of Prime Minister Anthony Albanese has promised steps to address a once-in-a-generation housing crisis by building more homes and providing financial incentives to first-home buyers.
While home prices gained in May, the monthly pace of rental growth eased to 0.4% following three months of 0.6% increases, according to Cotality.
The largest capital markets of Sydney and Melbourne are among the softest, the data showed. — Bloomberg
