LP.com

The Australian real estate market has shown sustained momentum in recent times, with data from CoreLogic revealing a 0.6% increase in Sydney home prices in May due to persistent supply shortages outweighing the impact of higher interest rates. This marks the fastest increase in three consecutive months, signaling that the Sydney market has completely emerged from the shadow of declining prices.

With home prices rebounding to AUD 1,156,020, the median price in the city is expected to reach new highs in the coming weeks, matching the record set in January 2022. Since hitting bottom in January 2023, Sydney's home prices have cumulatively risen by 14.1%. If this trend continues, the average home price in Sydney is projected to reach nearly AUD 2 million by 2027.

Despite speculation that the Reserve Bank of Australia may hike interest rates again, home prices nationwide have accelerated, rising by 0.8%, marking the largest monthly increase since October last year. Tim Lawless, Research Director at CoreLogic, noted that housing values and activity remain unaffected by the combined influence of high interest rates, cost of living pressures, and consumer sentiment.

Internet

The speed of Sydney's market recovery is surprising, especially considering the city's price levels and affordability. Lawless pointed out that Sydney's market completed the transition from a slump to a full rebound in just about 16 months. However, similar trends are evident in most markets nationwide, with prices continuing to rise in most regions and housing types, and some markets even experiencing accelerated growth.

Even in the 20 worst-performing suburbs in Sydney, median prices have risen by at least 14.8%. This demonstrates strong demand across the market but also suggests that regional disparities still exist in Sydney's housing market.

Internet

Pressure for further price increases in Australian home prices is expected in the future. The latest research from the Oxford Economics predicts that prices may experience localized fluctuations due to supply shortages and rising construction costs, but the overall upward trend will remain unchanged. In key areas such as Brisbane and Perth, price increases may range from 18% to 30%.

Analysts suggest that sustained growth in demand has far exceeded supply, exacerbated by increasing immigration and foreign investment, further intensifying the housing shortage issue. Therefore, one of the primary drivers of continued price increases is the imbalance between supply and demand.

Since the onset of the pandemic, Sydney home prices have risen by 25.4%, with other cities such as Brisbane, Adelaide, and Perth experiencing increases of over 50%. This indicates that the housing market crisis in Australia may persist for some time, requiring government and relevant authorities to take measures to address this challenge.