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Housing market surpasses $9 trillion mark

Residential real estate is now estimated to be worth over a record $9 trillion, just five months after reaching $8 trillion in value, according to CoreLogic.

According to the property research group, the total value of home dwellings has surpassed a new record of $9.1 trillion.

It has come just five months after reaching $8.1 trillion in value in May.

The surge in value has followed the recent broad-based capital gains witnessed across the country, with most housing markets now beyond their peak, CoreLogic said.

Recent CoreLogic data revealed that over 91.0 per cent of property resales during the June quarter recorded a nominal profit-making gain from the previous purchase price, the highest level of profitability in over a decade.

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Many housing markets have seen a rise in property values in the past year, driven by strong buyer demand, lower housing supply, record-low interest rates, and government incentives encouraging more buyers into the market.

According to one report, new sources of housing demand have included new permanent residents and returning citizens, while a shift in migration patterns during the coronavirus pandemic and border closures have added to the upward pressure on house prices.

CoreLogic head of research Eliza Owen said that the new record has put housing values at around 28.2 per cent higher than the estimated value of superannuation, the ASX, and commercial real estate combined.

The value increase has coincided with national house values reaching $719,209 and units sitting at $586,993 over September.

The dwelling market increased by over 20.0 per cent in the year to September, which is the highest rate of annual appreciation since June 1989.

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Nevertheless, Ms Owen said: “Although growth conditions remain positive supported by an expectation that mortgage rates will remain at record lows for an extended period of time and strong demand is buoyed by persistently low advertised supply levels, it’s becoming increasingly clear the housing market moved past its peak rate of growth in March when national dwelling values increased by 2.8 per cent.

“Affordability is an increasing challenge for many segments of the market, but particularly first home buyers who have not had the benefit of home ownership as a source of wealth through equity generation.”

Commenting on the Australian Prudential Regulation Authority’s (APRA) move to increase the minimum interest rate buffer it expects banks to use in serviceability of home loans from 2.5 per cent to at least 3.0 percentage points above the loan product rate, Ms Owen said it was a “subtle” approach to financial stability and less likely to result in the housing market moving into negative territory.

[Related: Migration flows to narrow house-unit price gap]

Housing market surpasses $9 trillion mark
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Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

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