Australian home values have risen 1.6% over the past month, but growth is slowing as housing becomes less affordable.
CoreLogic data shows the value of homes across the country rose 1.6% in July.
Over the past year, the national home value index has increased 16.1%, representing the fastest annual growth since February 2004.
While the market may be strong, CoreLogic’s research director Tim Lawless said it is also losing steam.
“With dwelling values rising more in a month than incomes are rising in a year, housing is moving out of reach for many members of the community,” he said on Monday.
Monthly growth had been trending lower since March, when the national value index rose 2.8%.
Lawless said demand was driven by low mortgage rates and the prospect interest rates would remain low for some time.
The continued mismatch between demand for and advertised supply of housing kept pushing prices higher.
Sydney’s homes recorded the sharpest reduction in price appreciation, falling from 3.7% in March to 2% in July.
“Worsening affordability is likely a key contributing factor in the slowdown here, along with the negative impact on consumer sentiment as the city moves through an extended lockdown period,” Lawless said.
Regional housing values remain strong, with conditions in the first seven months of 2021 nearly equal to the growth in the second half of least year.
Combined regional and capital markets values are up 14.5% and 14%, respectively, so far this year.
CommSec senior economist Ryan Felsman said while the hard lockdown weighed on Melbourne property prices, rising 1.3% in July, auction listings and results in the Victorian capital were picking up.
He said the 0.3% rise in Perth in the month showed the market in the West Australian capital “continued to confound observers”, given the relative strength of the state economy.
Commonwealth Bank economists expect national home prices to lift around 20% per cent in 2021 with house prices 24% higher and apartments up 9% over the year.
But national home price growth is expected to slow to around 7% in 2022, led by gains of 10% in Brisbane and 9% in Canberra, Felsman said.