Australian housing market surpasses $9 trillion valuation

From CoreLogic:

Just five months after reaching $8 trillion in value, CoreLogic has today announced its estimate of the total value of residential real estate in Australia has surpassed a new record of $9.1 trillion.

The surge in value follows the recent broad-based capital gains witnessed across the country, with most housing markets now beyond their peak.

CoreLogic Head of Research, Eliza Owen, says “The value of Australian residential real estate has surpassed $9 trillion dollars over September. This comes just five months after the market exceeded $8 trillion over April.

“This puts housing values around 28.2% higher than the estimated value of superannuation, the ASX and commercial real estate combined,” says Ms Owen.

“The increase in value has coincided with national house values reaching $719,209 over September, and units sitting at $586,993. The Australian dwelling market increased 20.3% in the year to September, which is the highest rate of annual appreciation since June 1989,” says Ms Owen.

Although growth conditions remain positive supported by an expectation that mortgage rates will remain at record lows for an extended period of time and strong demand is buoyed by persistently low advertised supply levels, it’s becoming increasingly clear the housing market moved past its peak rate of growth in March when national dwelling values increased by 2.8%.

“Affordability is an increasing challenge for many segments of the market, but particularly first home buyers who have not had the benefit of home ownership as a source of wealth through equity generation. The announcement this week by APRA of further tightening of serviceability buffers is a subtle approach to financial stability and far less likely to move the housing market into negative territory,” says Ms Owen.

Unconventional Economist
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  1. So I’m guessing if/when the Banks are forced to increase Interest rates by 2% then a lot of this “value” will disppear.
    Also, I thought it was produced by the billions of credit that the Government pumped into the system last year via Jobkeeper etc. Nobody actually bought all that new debt did they, so are the taxpayers on the hook for paying it back?

    • So why does anyone think lower interest rates help anything in the economy except house prices , renovators and builders.
      Interest rates should be 10 % for houses (APRA listening?) and 2 % for any actual business. But the left hand RBA lowers rates, while the right hand (APRA , govt) does nothing.
      How much does APRA execs get for doing nothing all year? Enough to buy a 3 million house…

  2. Jumping jack flash

    “Its over 9 trillionnn!!!!”

    But seriously this is fantastic. Think how much debt that means there is, and debt that could be potentially created… if anyone was actually eligible for it…

    And with that last bit in mind, it is a travesty of the highest ordah that Scomo’s stimulus couldn’t have unleashed the true power of the debt economy, and kicked off exponential debt growth forever.

    Everyone would be richer and richer forever, well, its zero sum actually, but the amounts of money transferred around would be absolutely enormous and growing all the time. The interest collected on that resulting gargantuan pile of debt would be monumental but of no consequence because it would be paid for by simply creating more debt. The bankers would be well pleased at that, and that’s all that matters.

    Ms Owen is on the money, but off the mark. There is no “housing affordability challenge”, the only challenge is to become eligible for the right sized pile of debt from some bank, somewhere, to buy the house you want.

    • Only lending 6 times income? With APRAs extra 0.5 % margin will only lend 5.8 times income. Already people are screaming . Give them more debt. 10 times income loans coming soon.

      • Jumping jack flash

        Any “restrictions” they put in place will only affect the margins. If 90 to 95% of people borrow between 4 and 8.5 times income, what do you think the limit will be set to? Probably 9. It will have little consequence except for the most ludicrous of cases.

        And if one thinks they absolutely need to borrow 10 times their income then maybe, just maybe, they should pare back their lifestyle expectations and go for a humble 8 times instead? I mean, its a bit of a kick to the groin, but sacrifices must be made…

  3. Strangely, the anti-money laundering controls for this massive industry are almost non-existent and when available, poorly policed, compared with the securities industry.

    • Its called a competitive advantage for the Real Estate industry for high end prices. can’t close it off with AML, the money will just go to London via Panama, where it is open slather .

      • OZ battlerMEMBER

        The UK is way more regulated, even The City.
        Banks can only lend 5 times earnings and investors are charged additional stamp duty for each additional investment property. Also full CGT on investment properties and inheritance tax.
        Australia is a property investors dream, even dumb people cream it – money for jam!

        • Jumping jack flash

          If the humble Aussie worker on average coin (is it 80k now?) a year couldn’t afford a multi-million dollar pad, then that would be unfair, and totally un-Australian.

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