House prices in Australia and New Zealand growing at record pace

House prices across the planet are growing at a rapid rate, with both Australia and New Zealand some of the best performers in the last 12 months.

According to the latest Knight Frank Global House Price Index results, Australian house prices have increased in value by 8.3 per cent over the past 12 months – the 18th fastest rate of growth in the world.

Over that same period, New Zealand house prices grew at 22.1 per cent, making it the second strongest performing country.

Turkey has seen the strongest house growth in the last year, with values up by 32 per cent.

Aside from Turkey, the top 10 is largely comprised of developed nations, including New Zealand (22 per cent), the US (13 per cent), Sweden (13 per cent), Austria (12 per cent) and Canada (11 per cent).

Across the 56 countries and territories that were analysed, the average change in price was 7.3 per cent, with 13 countries registering double-digit annual price growth in the year to Q1 2021.

Australia is experiencing strong house price growth, with Perth, Sydney and Canberra leading the market.

Over the most recent six-month period, Australian house prices have grown by 8.7 per cent, constituting the fourth fastest rate of growth globally. The growth in house prices has almost reached September 2017 levels.

Knight Frank’s Head of Residential Research Australia, Michelle Ciesielski, believes the fact that Australia has been relatively unscathed by the pandemic has been a contributing factor to the strong performance.

“One year on, Australia’s residential market has proved particularly resilient despite a global pandemic, with house price growth of 4.1 per cent in Q3 2020 faring much better than many other countries and territories which experienced stricter lockdowns.

“Since then, Australian house prices have been heating up with the 8.7 per cent growth over the six-month period the fourth fastest rate of growth globally – behind only Lithuania, New Zealand and Turkey.

“The last time Australia’s mainstream market saw double-digit growth was in September 2017 with 10.2 per cent. Australia is on the verge of reaching this status once again, with the cities dominating Australia’s price growth of Perth, Sydney and Canberra likely to each record double-digit growth by the end of the year.”

Ms Ciesielski says that while growth has been strong, many buyers are now reaching their limit.

“In recent weeks, we’ve seen some stability in Australia’s mainstream property market with many buyers reaching their borrowing capacity under the responsible lending regime and simply being priced out once again from the major capital cities,” Ms Ciesielski said.

“Although we need to be mindful we’re only days into the winter season, there is enough fuel for house price growth to be fired up again in the spring selling season by investors returning to the market, encouraged by low mortgage lending rates, three more months of savings and a strengthening economy.”