Australia House Prices Rise at Highest Rate in 17 Years

Surge in Housing Demand Due to Low Interest Rates and COVID-19 Remote Work

[Asia Economy Reporter Yujin Cho] Australia's housing prices recorded the highest increase in over 17 years, Bloomberg reported on the 1st (local time).

According to the nationwide housing price index released by real estate information company CoreLogic, Australia's residential property prices rose by 2.1% last month, marking the largest increase since August 2003.

CoreLogic data showed that Sydney and Melbourne, the capitals of Australia, led the nationwide upward trend with increases in the 2% range.

Tim Lawless, Research Director at CoreLogic, cited low interest rates, COVID-19 stimulus measures, and a shortage of real estate listings as the causes of Australia's housing price surge.

The Reserve Bank of Australia cut interest rates to an all-time low and is expected to maintain this low-rate policy for at least three years. Additionally, the spread of remote work due to COVID-19 has increased demand for residential properties over commercial real estate such as offices, leading to price increases.

According to the Commonwealth Bank of Australia, the largest mortgage lender in the U.S., there is speculation that Australia's housing prices could surge by 16% over the next two years.

Lawless said, "At this rate, property prices in Sydney and Melbourne will soon break new records," adding, "However, it is unclear whether this upward trend will continue if stimulus measures are halted while income growth remains stagnant."

According to data from the Public Policy Frontier Center of the Urban Reform Institute, a think tank that surveyed housing affordability in 92 major cities worldwide, last year Sydney's housing prices were 11.8 times the average income, and Melbourne's were 9.7 times. Sydney and Melbourne rank 3rd and 6th globally, respectively, in terms of housing affordability relative to income.