Decoding Australia's remarkable and worrying housing recovery
Australia's housing market has rebounded faster than most in the world — to the delight and dismay of those living within it.
Australia’s housing market has achieved something stunning — and concerning. Despite higher interest rates and stretched household budgets, property prices in some cities hit new highs last month. In others they're weeks away from breaking records.
Home values have rebounded nationally after a downturn that saw the median price in even the nation’s most sought after property market, Sydney, decline below $1 million (for apartments and houses combined). Sydney’s median property value now stands at around $1.12 million and is a mere few thousand dollars from its 2022 peak.
This year has astonished economists and housing affordability experts alike.
Gareth Aird is the head of Australian economics for the nation’s biggest home lender, the Commonwealth Bank. He notes that the turnaround has been “remarkable”, given the lift has occurred during the Reserve Bank’s rate tightening cycle. And the usual relationship between new lending and home prices has completely broken down.
Home loan commitments have fallen by just under a third since the market peak last year. “A decline of this magnitude would ordinarily be expected to be accompanied by an ongoing decline in home prices. But these are extraordinary times,” he says.
