Property Investment Blog

New call-to-action
All Posts

Australian House Prices Rising at the Fastest Rate in 32 Years

The exceptionally strong growth in house prices shows no sign of slowing down with the latest data from CoreLogic showing dwelling values are rising at the fastest rate in 32 years.

According to CoreLogic, national house prices rose at 2.8% in March, the biggest increase we’ve seen since October 1988.

All capital cities saw strong growth in March, which was led by Sydney with an incredibly strong 3.7% increase in dwelling values. While the weakest capital city was Adelaide, which still saw 1.5% growth. Regional Australia also continues to perform strongly, increasing in value by 2.5%.

The last time house prices rose this quickly in Sydney was during the last boom in 2015, prior to the credit tightening policies introduced by APRA.

Australia Property Prices March 2021

The strong result in March now means that both Sydney and Melbourne have fully recovered from the small COVID-induced downturn in mid-2020.

Sydney prices are now back above their 2017 highs by 2.6% and have fully recovered from the -14.9% fall we saw after the last boom. Similarly, Melbourne house prices are also fully recovered and are also back at record high levels.

Australian dwelling values March 2021

We are also starting to see the larger capital cities overtake the smaller capitals that had previously been seeing very strong growth.

The first quarter also closed with strong gains across the board, with dwelling values up by 5.8% nationally.

In terms of the units vs houses, there is still clearly stronger demand for lower density property as houses increased by twice as much as units over the first quarter.

At the same time, it is still the upper end of the market that is producing the bulk of the gains. The upper quartile of homes increased in value 3.7% in March, outpacing the lower quartile that showed a 1.6% increase.

Tight Listings Continue for Now

The strong gains continue to come on the back of record low interest rates and tight supply. The RBA has made it clear interests rates are likely to remain low for the next few years, while listings are also at historically low levels.

Graph of the Cash Rate Target

graph of cash rate target-1

Total listings across the country are still at 25% below the five-year average. However, that could be slowly starting to change as new listings are on the rise as homeowners are gaining confidence and look to capitalise on the state of the market.

New listings are currently 3% above the five-year average and appear to be trending higher.

Australia Property Listings March 2021

For time being, markets across the country are clearly favouring sellers, however, CoreLogic notes that things will likely slow down from the current record-setting pace.

So far, the strong demand from buyers has not been met by increases in inventory levels. However, at some point, the sellers will return to the market as we’ve started to already see with new listings on the rise.

Similarly, there has been a large influx of first home buyers, whose decision to purchase a property has likely been brought forward by the range of Government incentives on offer. Many of these incentives are set to end this year if they haven’t already.

While it has been stated that interest rates are likely to remain low for some time, if the housing market continues to overheat there is also some possibility that we could also see tighter credit policies, which as we know, can have an immediate impact on demand.

For the time being, house prices will likely continue to rise according to CoreLogic, however, we should expect the pace of the growth to slow down.


New Call-to-action

Real Estate Investar Editor
Real Estate Investar Editor
Real Estate Investar provides intelligent software, tools and data to help you save time and make money in the residential property investment market.

Related Posts

Dos and Don'ts of Refinancing

Refinancing is a very powerful tool for property investors as it provides a means to access the equity in a property to use in order to invest elsewhere. If your goal is to build a large portfolio, arguably the most important part of the process is your ability to obtain finance and refinance when required. Not sure how to refinance in an effective way? To help you, here are the do's and don'ts of refinancing.

House Prices Continue their Upward Trend in October

Housing prices around Australia continue to see steady growth with momentum remaining strong for the time being.

Australia's Top Yielding Suburbs

Properties which have a positive cash flow are a great benefit to investors as they can assist in creating an extra source of income (pre-tax). These properties cover the costs of holding and maintenance, and allow the extra rent paid to become additional income for you to enjoy.