Australia is one of the top 10 countries for global house price growth after recording its strongest growth rate since 2003.
Australia ranked seventh overall with 16.4 per cent growth in house prices—up from 18th last quarter and 19th last year with 6.1 per cent growth. The result was not enough to shift New Zealand from its position, also home to the world’s most liveable city, placing second at 25.9 per cent growth behind Turkey.
On average, house prices increased 9.2 per cent across the 55 countries ranked in the Knight Frank global house price index.
Knight Frank head of research Michelle Ciesielski said there were a number of contributing factors to Australia’s growth, including the lending environment.
“Scarcity remains the key driver for the significant growth in residential values across Australia, with pent-up demand from those engaging in an incredibly low interest rate environment,” she said. “A comparison at the end of June 2021 revealed that every capital city in Australia recorded an upward trajectory in annual sales volume, with a 30 per cent average, while the number of days a property was listed on the market has fallen by 24 per cent during the past year.
“This is equivalent to having almost a month, 29 days, shaved off the average Australian property listing.”
Ciesielski said if our economy was in a more stable position with this performance, we may have seen the delayed Australian Prudential Regulation Authority revised lending standards brought forward.
“The last time tighter lending restrictions were enforced to cool the market, Australia slipped down into last place on the global house price index, in early 2019, for three consecutive quarters, with annual growth falling by an average of 6.6 per cent.
“Back then, it was Sydney and Melbourne that influenced the overall growth in Australian property prices, ultimately leading to the more responsible lending regime.
“Now we are experiencing more activity in the smaller capital cities driving up this Australian residential growth.”
Low interest rates were also driving property investment, however, the Reserve Bank of Australia pushed back any suggestions that the rate or lending standards would change soon.