Home values on biggest upwards curve in two years
The average prices of homes across the country have had unusually strong month, in part because of government incentives are pushing up demand.
NATIONAL home values lifted 1.1 per cent in October, the fastest monthly pace of growth since May 2023, according to Cotality.
The unusually strong gains coincided with the expansion of the federal government’s 5% deposit scheme for first home buyers.
The scheme – enabling buyers to secure a low-deposit loan without lender’s mortgage insurance – was scaled up on October 1 to include unlimited places, no income caps and higher property price caps.
Dwellings that fell within the price caps of the deposit scheme jumped 1.2% in value, compared to 1% for dwellings above the limits.
However, Cotality analysts said monthly gains had already been increasing, influenced by the first cut to the official interest rate in February, seasonal factors and low stock levels.
“The data shows there has been a stronger uplift in property markets below the price caps of most regions through October,” Cotality’s Thomas Clarkson and Eliza Owen pointed out in their research.
“It is difficult to connect that directly to the scheme expansion, because there are many factors pushing the market higher and the low end of the market was outperforming in the lead up to the scheme expansion as well.”
Every city but Hobart and the ACT showed property values below the price caps had stronger capital growth than those above the caps in October.
Darwin outperformed other markets below the price caps in October, however the researchers said this may be explained by other factors like an increase in investor activity. Darwin is also one of the few regions where price caps for the scheme weren’t lifted on October 1.
Sydney performed second best of the markets below the price caps.
The researchers said it might be too early for the full impact of the expanded government scheme to show up in price growth, but it is worth monitoring over time.
“Ultimately the expansion of the 5% deposit scheme is one of many factors influencing strong growth at the lower-to-middle end of the market,” Mr Clarkson and Ms Owen added.
