Ray White Chief Economist Nerida Conisbee unpacks what factors are motivating the Australian property market boom.
Australian house prices have risen by 17 per cent since the start of COVID-19, representing one of the fastest growth periods for the housing marketing on record.
Ray White Chief Economist Nerida Conisbee said this extreme growth becomes even more apparent at a local area level. In some suburbs, prices have jumped by over $1 million.
In the biggest capital city, Sydney, the market has never seen such a sharp increase.
“This extreme price growth is however not unique and in most countries around the world, remarkably similar housing market conditions have occurred through the pandemic,” Ms Conisbee said.
“Although working like we used to has been a big problem, access to money hasn’t. With record low interest rates in most countries, as well as high levels of quantitative easing, banks are flushed with cash.
“In Australia, the situation is so extreme that bank CEOs have commented that they have so much cash they don’t know what to do with it and the impact on their profitability is problematic.
“It’s likely that a similar situation is occurring elsewhere in the world.”
Ms Conisbee identified the other main driver – locked down people don’t spend much, so savings rates have been particularly high.
“While most of the world is now opening up, there are still frequent lockdowns in many of them,” she said.
“Travel restrictions are also in place in many countries and this too is impacting on household spending.”
Source: Ray White