Australia’s house prices achieved their highest growth since 2002.

The Real Estate Institute of Australia (REIA)’s latest Real Estate Market Facts show that house prices have increased by 23.4% over the past year.

Former REIA President Adrian Kelly said this is the first time since June 2002 that the annual increase has been higher than 20%.

“Over the September quarter, the median house price increased in all capital cities. The weighted average median house price for the eight capital cities increased to $961,642,” he said.

House prices have increased by 4.5% over the quarter, while other dwellings (which include units) posted a 1.4% gain.

Of all capital cities, Sydney maintained its position as the most expensive market, with a median house price at $1.5m.

Sydney’s median house price is 55.9% higher that the national average.

On the other hand, Perth had the lowest median house price at $520,000, which is 45.9% lower than the national average.

Strong economic indicators

Australia’s expected recovery stated in the government’s Mid-Year Economic and Fiscal Outlook (MYEFO) indicate an upside for the property market.

MYEFO’s updated outlook point to a 3.75% economic growth for the Financial Year 2021-2022, up from the earlier projection of 1.5%.

REIA’s newly elected President Hayden Groves said the expected economic growth, as well as the slated drop in unemployment rate to 4.5% and the increase in wage growth to 2.25% will be positive for the property sector.

“The outlook for interest rates is benign under this scenario and with signs that prices are stabilising, buyers and sellers should have confidence in the economy and the property sector,” he said.

Mr Groves said the evidence of new listing enquiries rising and the expectation that the housing stock would approach long-term average levels early next year will moderate the growth in prices, easing the affordability issues experienced this year.

“With the possibility of tax cuts next year increasing disposable incomes, affordability would get a boost,” he said.

“For Australians considering buying or selling, this MYEFO should give them encouragement to reach out to your local real estate agent to discuss your options.”

However, Mr Groves said while all signs point to a positive year ahead for the property market, there is still a need for a long-term plan to address the supply side.

Photo by @sahosri on Unsplash.