Yahoo Finance 'Spectacular’ trend boosting house prices in 2021
The Australian housing market is starting strong in 2021, after property values rose by 1 per cent in December, according to CoreLogic data.
That’s the third consecutive month of gains, with the national home value index finishing the year 3 per cent higher, despite suffering a 2.1 per cent drop in dwelling values between the months of April and September.
Across the nation, Darwin experienced the highest increase in dwelling values in December, with the median house price rising 2.3 per cent to $416,183.
Brisbane, Perth and Adelaide all saw their median house price rise by 1.1 per cent, while Melbourne dwelling values rose 1 per cent and Sydney dwelling values rose by 0.7 per cent.
Now, the median house price in Sydney is $871,749.
“Record low interest rates played a key role in supporting housing market activity, along with a spectacular rise in consumer confidence as COVID-related restrictions were lifted and forecasts for economic conditions turned out to be overly pessimistic,” CoreLogic’s research director, Tim Lawless said.
“Containing the spread of the virus has been critical to Australia’s economic and housing market resilience.”
And it wasn’t just capital city markets that performed well - as remote working opportunities and demand for lower density housing options increased, regional housing values surged, Lawless said.
On the flipside, higher density housing generally underperformed throughout the year.
“Demand from investors has been weighed down by weak rental conditions across the unit sector along with high supply levels in some precincts,” Lawless said.
“A transition of demand towards lower density housing options has helped to buoy house values.”
Outlook for 2021
While housing markets have largely recovered, four of the eight capitals still recorded dwelling values lower relative to their previous peaks.
Melbourne house values are still 4.1 per cent below their March 2020 peak, Sydney values are still 3.9 per cent down and Perth and Darwin values remain 19.9 and 25.7 per cent lower respectively to their 2014 peaks.
And while the trajectory for the Aussie housing market is looking positive, Lawless said further COVID restrictions could set back growth.
What’s more, if international borders continue to remain close, rental demand is likely to be impacted significantly.
“Regions where overseas migration has historically comprised a larger portion of overall population growth, such as Melbourne and Sydney, will be impacted the most by prolonged border closures,” the report stated.
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