CoreLogic says that Australian home prices continue to grow in April

Australian home prices soared in April, mainly due to the increase in prices in less expensive segments of the market. A persistent shortage of homes dominated the discussion regarding high interest rates and rising costs of living.

The figures from property consultancy CoreLogic released on Wednesday (May 1) showed prices nationally climbed by 0.6 percent in April, which was unchanged from the gains in February and March. By 2023, they’ll have already increased by 8.1 percent to hit the previous high.

In April, the price hikes were caused by the rise of 2 percent in Perth and a hike of 1.3 percent in Adelaide. Both markets are more affordable. Sydney prices rose by 0.4 percent however Melbourne’s price dropped 0.1 percent.

CoreLogic observed that nearly every capital city has higher growth within the lower end of the market.

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“The persistent rise in housing values, despite a variety of negative factors that normally push prices lower, could be traced back to the insufficient housing supply relative to the demand,” it said.

Despite the fact that the high rate of inflation across the country has created fears that interest rates will remain at a high level for a while, “housing values are likely to be supported by the mismatch between supply and demand, which doesn’t appear like it’s going to change anytime soon”, said CoreLogic.

The Reserve Bank of Australia (RBA) has raised interest rates by an astounding 425 basis points in the month of May 2022 to contain sky high inflation. However, the tightening has done little to reduce the exuberance of the market for housing.

This could suggest that the economic conditions aren’t quite so strict as the RBA would like, since it has kept rates steady at three meeting. The markets are betting on the likelihood of another rate increase by September. REUTERS

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