Australia’s Housing Boom Defies Lockdowns Even As Growth Eases

Australia’s housing market defied lockdowns in the nation’s two biggest cities to post a 1.5% rise in prices in August, even as the growth rate continued to steadily slow from its March peak.

Housing values in the country are up 15.8% this year, and 18.4% higher than 12 months ago, in contrast with the average annual wage growth of just 1.7%, according to CoreLogic Inc. data released Wednesday.

“Housing prices have risen almost 11 times faster than wages growth over the past year, creating a more significant barrier to entry for those who don’t yet own a home,” according to Tim Lawless, research director at CoreLogic.

While lockdowns are affecting consumer sentiment, they have had a bigger impact on the number of listings and properties sold, than the price, he said. Price growth has been coming off since a 2.8% rise in March.

“The weaker trend in unit rents across Australia’s two largest cities is likely a reflection of their greater exposure to temporary overseas migrants as a source of rental tenancy, especially foreign students who would normally underpin inner city high rise rental demand,” Lawless said in a research note Wednesday.

Still, rents are up 8.2% over the 12 months ending August, the largest rise since 2008. But the gap between housing sales growth and the cost to rent has dragged gross rental yields down to an all-time low of 3.32%, the data show.