Australian real estate prices are rising again, according to Deloitte Access Economics’ latest Business Outlook released this week.
Average Australian real estate prices in Sydney rose by about $3000 per week in September, while Melbourne experienced a bounce of about $2500 a week.
Deloitte is also predicting ‘more to come’, noting that housing-related lending has started to climb, and auction clearance rates were returning to boomtime levels.
It’s been a stunning turnaround for the market after Australian real estate prices fell in both cities by about $2000 a week from late 2018 to early 2019.
The report from Deloitte said: ‘The rebound in Sydney’s housing prices is welcome, but it’s also bad news. It will help NSW by boosting retail and housing construction but down the track the return towards diabolical rates of housing affordability will bite into NSW’s economic and population growth.’
However, Deloitte doesn’t think the market will flip straight back into ‘bubble mode’.
The report said: ‘Some of the current rebound in housing prices is happening simply because the mood among buyers has recovered faster than sellers have rejoined the market.’
Despite auction clearance rates bouncing so high they would in recent years have led to an implied 10 per cent jump in Sydney and Melbourne house prices, Deloitte doesn’t think there will be the same increase this time.
The previous housing boom lasted about six years, although cities like Darwin and Perth had a much shorter cycle. Sydney was the main beneficiary, with prices rising by 70 per cent between November 2011 and 2017.
Since then prices have dropped by about 12 per cent, but the market is now showing signs of recovery.
Deloitte suggests the housing downturn in Australia alongside the drought have been the two main factors in the slowdown in the economy, with global factors not as influential as many believe.
With the corner finally turned in Australian real estate prices, overseas property investors are expected to return to the market as the economy strengthens.