Home dwelling prices have not risen at the current rate since 1988. In March 2021, dwelling values across Australia rose by 2.8%.
In October 1988 they rose by 3.2%. October 1988 was around a year after a share market crash and interest rates were on a downward trend.
The current rate of increase in dwelling prices is not sustainable. The Reserve Bank’s inaction could be seen as an indicator that it concurs with this view.
There are affordability constraints and bank (risk) lending constraints. Part of the reason for the current spike is the lack of new listings. However, the higher prices will bring more sellers into the market.
According to CoreLogic, current listing levels are 25.5% below the average of the last five years.
For conveyancing businesses, the current upward trend in prices couldn’t be better news. Higher prices have historically been associated with greater sales activity. As new vendors are encouraged into the market due to higher prices, the remainder of 2021 looks to be bright for conveyancing. While vendors, rather than conveyancers, are the main beneficiaries of the current environment, 2021 is developing into a peak year for conveyancing.
What could bring these happy predictions to an end? Inflation.
A significant change in the rate of inflation looks like it could be the only thing that will wake up the Reserve Bank from its inactivity.