Unexpected factors are behind the current "boom" in the Australian real estate market amid the COVID-19 pandemic, according to a MacroBusiness economist.
Leith van Onselen, chief economist of MB Fund and co-founder of MacroBusiness, said that while the real estate market moves in cycles, there is something different about the engine of the current boom.
"The housing price spike is being led by the smaller major capitals like Perth and Brisbane. This is in stark contrast to the recent spikes, which were driven largely by Sydney and Melbourne," said he said.
According to recent figures from CoreLogic, the smaller markets, on an annual basis, have outperformed the larger markets of Sydney and Melbourne. Darwin, for example, posted an 11.4% annual gain in median home value compared to the 2% growth in Sydney and the 2.1% decline in Melbourne.
One explanation for this could be a drop in net migration abroad. Onselen said long-term net arrivals to Australia turned negative for the first time since 1976.
"Obviously Sydney and Melbourne are much more dependent on mass immigration, especially when it comes to inner-city apartments, which is likely weighing on their growth," he said. declared.
Another difference in the current uptrend in the housing market is the emergence of homeowners as a major driver of activity.
According to figures from the Australian Bureau of Statistics (ABS), the value of new homeowner loan commitments reached record levels in December 2020.
In contrast, new mortgage liabilities from investors "remain well below their 2015 highs," Onselen said.
However, Peter Koulizos, president of Property Investment Professionals of Australia, said that could change in the coming months as investors are likely to reclaim their place in the market.
And although it remained below the recent boom, new investor loan commitments have increased from the low point in investment activity in May of last year , up around 10% in December compared to the same period last year.
“In fact, the latest official data shows that more than $ 6 billion in new investor loans were recorded in December – the highest level since July 2018,” Koulizos said.
Additionally, Koulizos said he believed the growing number of investors in the market, coupled with vigorous activity by owner-occupiers and first-time homebuyers, would add to the pressure on real estate prices in many Australian suburbs.
Top suburbs:
Whyalla
,
Newcastle
,
The Pelvis
,
bendigo
,
spearwood
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