On a day when the Australian parliament began an inquiry into housing affordability, the Australian Bureau of Statistics (ABS) released data that show residential property prices grew at their fastest pace in 18 years during the second quarter of 2021.
According to the ABS, residential property prices grew at 6.7% during the second quarter of 2021, the fastest quarterly growth since the series began in September 2003.
Residential property prices rose in all the capital cities, the ABS added. The fastest rise was in Canberra (8.2%) followed by Sydney (8.1%), Hobart (6.3%), Melbourne (6.1%), Brisbane (5.7%) and Adelaide (5.3%).
Low levels of housing stock
“The continued growth in property prices was occurring at a time of record-low interest rates. Persistently low levels of stock on the market were being met with strong demand and properties transacting at an increasingly rapid rate,” said Michelle Marquardt, ABS’ head of prices statistics.
Separately, at an address to the Anika Foundation, Reserve Bank of Australia’s Governor Philip Lowe admitted that housing prices are now 19% higher than they were before the pandemic. While he admitted that there are public policy issues that need to be addressed regarding housing prices, Lowe said cooling down the housing market was not on RBA’s agenda.
“I want to be clear that this [cool the property market] is not on our agenda. While it is true that higher interest rates would, all else equal, see lower housing prices, they would also mean fewer jobs and lower wages growth. This is a poor trade-off in the current circumstances,” he said.
Australian parliament investigates house prices
Meanwhile, hearings started in an inquiry into the housing affordability and supply in Australia by a parliamentary committee. On the first day, Crystal Ossolinski, the director of domestic demand in the macroeconomic group of Australia’s Treasury department, told the committee that strong demand during the pandemic was driven by changes in preferences and a reduction in expenditure on other items. According to a report by The Guardian, Ossolinski said that these demand factors have started to come down.