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COVID Surge: Australia's Housing Market Booms Despite Challenges

Source: The Nightly

CoreLogic found out that there is a 32.5 percent increase in the home value index since the outbreak of COVID-19 in 2020. The increase meant the median value of an Australian house rose by $188,000 in the four-year period.

Tim Lawless, the research director of CoreLogic mentioned that the property prices kept increasing despite the high inflation and skyrocketed interest rates. Despite the 7.5% decrease in the market due to the rise of the interest rates, the housing values were now in a new growth cycle in February. Not only is the house price increasing, but also the rents. A 32.4 percent growth in rents since March 2020, or an extra $150 per week for a median property.

While the pandemic led to strict border measures and Australia largely being cut off from other nations, Mr Lawless said housing demand remained strong, with additional demand in regional areas. Another factor which contributes to the increase of housing demands is the loosening of restrictions following the outbreak of COVID saw overseas migration spike to record highs, which has gone on to impact housing trends.

According to Mr. Lawless, the patterns of net overseas migration have a swift effect on the demand for rental properties, while the impact on purchasing demand tends to lag behind. In light of this, he proposed easing rental conditions due to the sluggish pace of net overseas migration.

Despite the report indicating an unprecedented demand for housing, Mr. Lawless emphasized the absence of any corresponding response from the supply side.

He stated, 'Completion of dwellings has remained relatively stagnant throughout the pandemic, facing challenges such as supply chain constraints, material shortages, labor scarcities, and a surge in construction activities. These factors collectively create a challenging environment for the delivery of new housing supply

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