Defying expectations of a correction – the Australian housing market continues to flourish as prices soar and auction clearance rates rise above 80%. There are positive indications for continuing future growth, no matter where in Australia you may want to live or invest.
Find out what the driving factors and their results are, both nationally and in your own region.
Overview of the Australian housing market
Property data firm CoreLogic’s Home Value Index shows a 2.06% average growth in the five main state capitals in February 2021, when compared with January, and a rise of 7% in regional areas. Growth drivers include –
- very low interest rates,
- government stimulus packages,
- a high savings rate amongst the employed,
- reduced anxiety about COVD-19, and
- at the same time a desire to move away from cities to the safety of less densely populated regional locations.
But a boom of this kind is always accompanied by risks. The escalating level of debt amongst property buyers may not be sustainable. Tree- and sea-changers may decide to move back to the big smoke. Despite this, many analysts have predicted price rises of 15-17% in 2021, with continuing growth in 2022.
NSW – Regional boom due to Sydney exodus
Regional NSW property prices rose by almost 10% in 2020, on the back of a pandemic-driven retreat from Sydney CBD. The exodus is expected to continue in 2021. Remote working options make relocating from the city to more rural areas possible. Rental property supply in the regions is also under pressure as a result, delivering an opportunity for investors.
QLD – Interstate migration driving strong growth
Brisbane has been less affected than the major southern capitals by reduced international immigration, and has also benefited from inbound migration from other states. House prices in Brisbane (up 5.9% in 12 months) are rising much faster than unit prices, and recent auction clearance rates have topped 70%. There is continuing strong demand for rental properties and house building approvals have soared. More than 30,000 new homes are expected to be built in 2021.
WA – Perth still the second most affordable capital, but prices are rising
Perth’s status as the second most affordable of the state capitals may be under threat. Houses in Perth are selling, on average, within 21 days of listing, compared with 38 days in the previous year. Many houses are sold even before they are listed on the market. Overseas and interstate returnees are contributing to the release of pent-up demand as the COVID threat recedes. A shortage of rental properties is pushing more people into purchasing.
SA – Median house price reaches record high
When Adelaide’s median house price peaked at a record $510,000 late last year, experts attributed the rise to a shortage of new listings in the face of strong demand, creating a seller’s market. Other local factors cited include SA’s success in dealing with the pandemic, an increase in disposable income following reduced discretionary spending on items like overseas travel, and the return or influx of many young professionals from interstate. Adelaide remains much more affordable than Sydney and Melbourne, and its lower commuting times make it attractive to interstate buyers.
NT – Growth to continue through 2021
Darwin’s property prices have benefited from migration from the main state capitals, similar to regional towns in the southern states. Rental vacancy rates have also plummeted, so there is a pressing need for more rental properties. Realestate quotes experts at REINT (Real Estate Institute of the NT) predicting continued strong growth for the NT market throughout 2021.
ACT – Top of the HIA scorecard
Shane Oliver, chief economist at AMP Capital, forecasts a further 10% growth in Canberra property prices in 2021. Long-term strength in the housing market is also signalled by the fact that the ACT has topped the HIA’s Housing Scorecard for the first time since 2014. The scorecard ranks all states and territories according to indicators such as home building activity, renovations, housing finance, and the pace of interstate and overseas migration.
TAS – Home to the most profitable capital city
Investors and homebuyers looking for real estate capital gains in a state capital need look no further than Hobart, where 96.6% of property sales recorded a profit in the September 2020 quarter. Corelogic tables also reveal that house prices in Hobart grew by 2.5% in February 2021, and by 8.7% in the previous year, with even higher percentage growth recorded in regional Tasmania. Some Tasmanian real estate experts are predicting double-digit percentage price growth in 2021.
VIC – ‘Family pandemic’ predicted
With the worst of COVID-19 hopefully behind us, one Victorian property expert foresees a ‘family pandemic’ – too many families and not enough family homes on the market – in 2021. House construction is expected to boom. Government incentives up to $54,000 of are available to buyers of new homes.
Australia remains one of the least-affordable housing markets in the world and this trend is projected to continue. As prices are expected to rise for the next two years, there are opportunities for investors and home buyers who are willing to jump on the upward swing.