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PropTrack Home Price Index: March 2022

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The new PropTrack Home Price Index reveals that home prices rose in March, despite a significant slowdown across the country. South Australia outperformed the monthly price hike as it continued to gain momentum in Adelaide.

Price increases in the region have been outpacing the capital for the past year, and the region’s New South Wales, Queensland and Tasmania are benefiting from a trend towards lifestyle locations and larger homes.

PropTrack’s new Home Price Index, released today, measures changes in home real estate prices across Australia, analyzes real estate market trends, and provides expert insight into the key factors driving the home market.

The main highlights of the March 2022 report are:

  • Australian home prices rose 0.34% in March. That’s about half the average 10-year pace of monthly growth, well below last year’s growth rate.
  • Monthly price increases were highest in South Australia, with Adelaide being the top performer in the capital.
  • Prices fell slightly in Melbourne in March, with even greater declines recorded in Perth and the Northern Territory.
  • The region continues to outperform the capital in the post-pandemic market. Prices have risen 24% in rural areas over the past year, but only 15% in the capital.
  • Over the past year, growth has been noticeable in Brisbane, Queensland, New South Wales and the Division of Australian Capital Territory.

House price growth has slowed since late 2021

House price increases slowed significantly in 2022. In March, national prices rose at the slowest monthly pace since May 2020, shortly after the country’s blockade was lifted.

Over the year to March, home prices across the country rose 18%. The peak of price increases is clearly a thing of the past, but 2021 was a very exceptional year for house price increases- The third fastest episode in Australian history.. More exceptional situations are needed to adapt to the situation in 2022.

Communities and homes continue to benefit from pandemic changes in taste

Rural areas continue to benefit from relatively affordable prices and changing tastes for lifestyle locations and larger homes following a pandemic. Prices have risen 25% in rural areas over the past year, but only 16% in the capital.

In March, regions of all states exceeded the metropolitan area. Regional strength is particularly pronounced in New South Wales, Queensland and Tasmania, with growth rates of over 24% over the past year.

These same changes in taste have benefited home prices across the country. House prices are rising 20% ​​annually, and units have risen only half that amount over the same period.

The regions of New South Wales and Brisbane stand out among the fastest growing regions.

Regional areas are also prominent in the SA4 region, which has grown the fastest in the past month and year. Many of these locations are located in New South Wales, the region with the highest price momentum in 2022.

Looking at the entire capital, the outperformance of the surrounding area is clear. These areas became more prominent during the post-pandemic period as homes grew and commuting decreased.

It will be interesting to see if this balance will return to the city center when workers return to the office in 2022 and immigrants are fully restored.

Read more about how to calculate the PropTrack Home Price Index

Outlook

The housing market has grown very strongly since mid-2020. This has been facilitated by historically low borrowing costs, unprecedented changes in preferences, and low inventories available.

The slowdown in inflation from late 2021 to 2022 mainly reflects the diminishing market impact of low interest rates. Mortgage rates have already begun to rise, especially fixed rate mortgage rates have already begun to weigh on rising home prices. The average interest rate paid on new home mortgages is currently 2.5%, marking the first rise in years. In addition, as the larger RBA raises its cash rate, it is expected that borrowing rates will rise. This is widely expected in the second half of 2022.

Local market prices are expected to rise stronger than the capital for some time and will continue for at least the first half of 2022. Australia is still attractive and real estate prices are almost always cities, despite recent increases. But hoping that 2022 will be an uninterrupted year for the urban lifestyle, it may be somewhat less attractive. And the benefits of a more densely populated living area will come back.

Investor returns are another story that is expected to continue in 2022. The return of immigrants will activate a major source of rental demand, especially for landlords in the city center. Pandemics are changing tastes as both city center locations and apartments are relatively cheap and make up the type of housing that investors often prefer.

But overall, the outlook for inflation remains constrained. Further profits depend on income growth as prices have caught up with lower borrowing costs, and income growth has remained modest nationwide for the last few years. This will be balanced by the timing and speed of rising interest rates, the largest unknown in the 2022 housing market.

* The PropTrack Home Price Index measures monthly changes in home real estate prices across Australia and provides current views on real estate market performance and trends. The PropTrack Home Price Index uses a hybrid approach that combines repeat sales and hedonic regression. The repeat selling method matches the resale of the same property, but the hedonic regression estimates the value based on the value of a similar property. You can use the hybrid model to match two properties in the same Australian Bureau of Statistics Statistics Area 1 (SA1) region of the same type and control the difference in property characteristics as you would for a hedonic regression. The PropTrack Home Price Index is a revised index that includes the entire past history updated monthly with current transaction information.

** This report is realestate.com.au Internal data and data provided by third parties, including state agencies. It is as of the time of publication. This report is for general information only and is not intended to compose advice and should not be so trusted. If you would like to cite or refer to this report (or the findings and data contained therein) in a publication, please refer to this report as the PropTrack Home Price Index Report – March 2022. look Complete copyright and disclaimer report..

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