Property Market Booms
The Australian property market continues to boom, as buyers face a "perfect storm" of strong demand and low supply. Despite emerging from a global pandemic and economic downturn, the Sydney market has reached an all-time high and other capitals are not far behind. Property sellers are being swamped with offers, banks are welcoming new customers, and record low interest rates don't look like rising any time soon. With new listings down and supply restrained across the board, pressure is likely to remain in the market for some time.
According to data from CoreLogic, Australian property prices have risen at their fastest rate in 17 years. National home values surged 2.1% higher in February, which is the most movement in a single month since August 2003. Sydney and Melbourne led the charge with 2.5% and 2.1% growth respectively, with Sydney values having eclipsed recent highs from mid-2017. The median dwelling value in Sydney is now $895,933, with the median price for detached homes valued at $1,061,229. While the median value of units is yet to reach record territory, it has been measured at a healthy $738,254.
According to the CoreLogic report, the market has been "Spurred on by a combination of record low mortgage rates, improving economic conditions, government incentives and low advertised supply levels. Australia's housing market is in the midst of a broad-based boom... Housing values are rising across each of the capital cities and rest of state regions, demonstrating the diverse nature of this housing upswing."
The median property price for the whole of Australia is $598,884, with this number much higher in many capital cities. Melbourne is a close second behind Sydney at $717,767, followed by Canberra at $706,454, and Hobart at $535,994. Surprisingly, Hobart is now more expensive than Brisbane, which has a median price of $535,618. On the other end of the spectrum, Perth, Adelaide, and Darwin recorded median property prices of $491,795, $478,587, and $438,645 respectively.
Over the past 30 days, property prices have risen in every capital city and region in Australia. Much more than a capital bubble, this signals a sustained period of growth that has not been seen since the end of the GFC. According to Steve Mickenbecker, executive of financial services from Canstar Group, "It is the perfect storm for house prices. On the supply side, new listings through 2020 were well below the four preceding years and total listings now are also down as stock is absorbed before or as soon as properties hit the market."
According to a panel of 40 experts and economists from consumer research group Finder, the average Australian property price will grow by 12% over the next two years. This will add $120,000 to the value of the average Sydney home. Along with extra demand fuelled by low interest rates, government incentives, and an open lending environment, supply is an ongoing issue. New listings in 2020 were well below average, and total listings are also down. While market forces will eventually slow the pace of demand, property listings need to increase dramatically before heat is reduced.