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Australia’s residential property market recorded its strongest growth in more than two years, with national home values rising 1.1 percent in October and 6.1 percent annually, according to research firm Cotality. All capital cities experienced price increases, with Perth and Brisbane leading gains, while regional areas saw values climb 7.5 percent over the year. Spring auction activity reached record levels, with 3,253 scheduled auctions in the week ending October 25, representing a 3.8 percent increase from the same period last year.
The price surge reflects intensifying competition between investors and first-home buyers, with Reserve Bank data showing investor borrowing now accounts for nearly 40 percent of new loan originations, up from 25 percent five years ago. The margin between owner-occupier and investor mortgage rates has narrowed to 18 basis points, a series low, while government schemes allowing 5 percent deposits have enabled more first-time buyers to enter the market. Mortgage brokers report some aspiring homeowners are purchasing investment properties while living with parents to build equity, unable to compete directly for owner-occupied homes.
The Reserve Bank warned in its October financial stability review that surging investor activity could exacerbate price increases and heighten the risk of a subsequent market correction. The central bank noted investor loans typically carry greater default risk during economic downturns and that high investor concentration could amplify housing price swings. Regulators including the RBA and Australian Prudential Regulation Authority retain authority to intervene with measures such as restricting interest-only loans if activity reaches risky levels.
Cotality head of research Eliza Owen said home values could reach 6 to 7 percent growth by year’s end, with demand continuing to outstrip supply. The likelihood of a Melbourne Cup Day interest rate cut has diminished following higher-than-expected September quarter inflation data, though analysts still anticipate rate reductions in 2026. Owen projected softer price growth of 4 to 5 percent next year as market dynamics stabilize.
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