Australia’s residential housing stock has gained an additional $1 trillion in value in the past five months, in spite of unemployment spikes and nationwide lockdowns.
The record-low interest rates, inability to spend and government grants have all attributed to the growth, with CoreLogic outlining how quickly the market has increased in value. The company estimates that the market has grown by a trillion dollars between the months of April and September.
Staggeringly, despite the biggest economic decline since the depression, the value of the Australian property market has risen by approximately $2 trillion in 14 months.
The Morrison Government’s first home loan deposit scheme is helping a number of Australians secure their first home, with data revealing that it has assisted nearly 6000 essential workers. Nearly 60 percent of those who used the scheme are aged under 30 and have fast tracked the purchasing of homes by four years on average.
The Australian Prudential Regulation Authority (APRA) has announced a tightening of bank lending standards in a bid to quash concerns regarding the state of the financial system, that is related to the surge of house prices nationwide. Banks must now test if a potential homeowner could afford to pay their repayments at an interest rate 3 percentage points higher than the actual rate, as opposed to 2.5. The change in standards is expected to reduce the borrowing capacity of a homeowner by around 5 percent.
Federal Treasurer, Josh Frydenberg says the move is designed to regulate investors as opposed to potential homeowners.
“What has been pleasing in this cycle compared to previous cycles is that more first homeowners, more owner-occupiers are coming into the market. And this move will affect investors more than it will affect first home buyers,” he says in an interview with Seven News.
For more information regarding Australia’s rising property market value, head to corelogic.com.au/reports.
