Corelogic’s latest figures show national home values increased 13.5% over the 2020-2021 financial year. This equates to the highest annual rate of growth since April 2004.
Meanwhile, in May 2021, there were 218 suburbs across the nation where median house or unit values reached the million-dollar mark. That’s not bad at all, when you consider that parts of the country have been in and out of lockdown and our national and, sometimes state, borders have been shut.
Over the second quarter of this year, we’ve had a continuation of the growth and trends we observed earlier in 2021. Our agents have seen multiple buyers interested in every property, strong competition leading to record sale prices and high auction clearance rates.
Thriving in adversity
The property market across the entire country has surged through COVID-19. Canberra has proved itself a solid and attractive market while Perth has experienced a boom in buyer interest. Pent-up demand in Melbourne has led to excellent results despite four lockdowns. Sydney property can’t keep out of the headlines, to the extent that the median house price in some suburbs has been growing thousands of dollars every single day. And Queensland has been benefiting from strong interstate migration.
Most Australians have been fortunate to be shielded from the worst of the pandemic. But as we reached the end of the second quarter several states and territories plunged back into lockdown and there’s little doubt that a sense of uncertainty returned to our lives.
Luckily, as a business, we’d been in this position before. We seamlessly adjusted to the new health measures for open homes, and transferred to online sales and auctions. While a handful of properties were withdrawn, the bulk of our sales proceeded through lockdown, achieving amazing results.
Based on what we witnessed last time we came out of lockdown, and in line with global trends, we expect the market to rebound strongly from any pause it may take. Added to this, we’re coming into spring where we typically see an upswing in property listings and buyers. As we come out of winter, many resolve to make a move, often hoping to be settled by Christmas.
The trends that matter
One key feature of today’s market is a lack of property listings. Supply, or stock, was down around 24% in June, based on five-year averages. Combined with very strong buyer demand, this is driving the great results we’ve been seeing in the property market both in the cities and regions. We’ve already seen a sharp growth in tree and sea changers driving demand in regional markets across the country.
We anticipate the recent lockdowns will continue to drive this activity, causing more people to reassess lifestyle goals, property included. As a result, price growth in regional markets has outpaced that of capital cities – at times by more than double – although that gap is starting to narrow as we hit mid-year.
In the year to March 2021, estimates are that close to half of the one million Australians living overseas returned home. Those who have returned are often keen to establish roots by buying property and settling back into the Aussie lifestyle. Others are staying put overseas for now but are buying sight unseen for when they do return. A third group of expats are buying with no intention of coming back but simply see the value in investing in Australian property.
Interestingly, despite border closures foreign buyers are still active, with foreign investment hitting its highest level in three years. Data from the Foreign Investment Review Board shows the US topped the list when it came to money spent by foreign buyers for the 2020 financial year, followed by Singapore, China, Germany and Canada.
Where to from here?
Australia is in a better economic position than many, if not most, predicted a year ago. The vaccine rollout is underway – albeit at a slower pace than initially promised – and the federal government has revealed a four-stage plan to reopen Australia.
But challenges remain, such as continued low migration and the possibility of the future tightening of lending criteria or raising of interest rates. The COVID-19 clusters across the country at the time of writing may temporarily slow the number of listings.
However, we expect to see the strong results and high clearance rates continue. We also believe there will be a ‘rubber band’ effect as the market stretches out then swings back hard in spring. While buyers may need to be persistent, and vendors need to have realistic expectations, there are many great opportunities in the national property market right now.
Long term, if the pace of growth continues, affordability could again become an issue and buyers should always keep in mind the impact of a rise in interest rates.
Please download the complete report from the download button, inside you will find:
- Brisbane overview by David Price
- Perth overview by Stuart Cox
- Melbourne overview by Peter Kakos
- Sydney overview by Matt Lahood
- Property management overview by Maria Carlino
- Projects overview by Steven Chen
- Finance overview by John Kolenda
