DECEMBER 2020 CAPITAL CITY MARKET UPDATE
The Brisbane property market has just recorded its highest ever median house values at $568,629, which represents an annual increase of 4 per cent. The market for houses in Brisbane is benefitting from high levels of inter-state migration, more affordable prices than either Sydney or Melbourne, low interest rates, government incentives and low vacancy rates outside the CBD. Auction clearance rates have been consistently higher than 2019, transaction volumes are strong, and the sales of new land in the growth corridors had surpassed the 2019 total by the end of October. With the market for new homes driven by the Federal Government’s HomeBuilder grant, a total of 5,700 lots had sold by the end of October, compared to 5,634 for the whole of 2019. New listings are currently around 20 per cent down on the same time last year, which given the rising interest and demand across the market, is creating a seller’s market and a situation where demand is outstripping supply.
The one downside of the Brisbane market is that demand for houses is not translating to the apartment market, which remains flat, with median values the same as this time last year and still well down on the peak of the market recorded back in 2010.
Commentators are predicting Brisbane’s market to continue booming into 2021, with SQM predicting price rises of 4-8 per cent, while Westpac is predicting house prices to increase by 20 per cent over the next two years. All the indicators suggest that Brisbane will be one of the strongest markets over the next couple of years.
The Melbourne property market was hit harder by the COVID-19 pandemic than the other capital city markets, with two lockdowns affecting supply, auction clearance rates and suppressing the median value of properties. However, sentiment in the market has bounced back strongly following the end of the second lockdown, with median house prices increasing by 0.7 per cent for the month of November, the first increase since April. The market had performed strongly in the year to April 2020, reaching a record median house price of $819,611 as the market recovered from a two-year downturn. Melbourne’s median house price had dropped to $790,543 in November 2020 following successive months of negative growth during the lockdowns, but this figure is still up 2.3 per cent on this time last year. However, the apartment market is a bit slower to recover, with median apartment prices of $568,056 matching the figure for a year ago.
As the year comes to a close, the improving market sentiment is showing in auction clearance rates of around 70 per cent for the past two months, matching the clearance rates from the same period in 2019. New listings have increased dramatically in the past two months, and are now slightly higher than this time last year. The shortage of new stock during the pandemic actually helped to ensure that Melbourne’s property market didn’t fall too far, by creating a situation where the amount of supply kept up with the lower demand. Now that the lockdowns are finished, a back-log of property listings has entered the market as sellers look to make up for lost time. However, as there remains significant pent up demand from buyers, there is strong competition for available stock and this is driving prices back up as the Melbourne market recovers from the pandemic.
Sales of land in Melbourne’s growth corridors have been strong during the last half of 2020, driven by the Federal Government’s HomeBuilder grant. State and Federal government initiatives including increased spending on infrastructure, stamp duty discounts and land tax discounts are also helping to ensure that Melbourne’s property markets are recovering quickly from the pandemic.
However, despite the strong indicators from the last few months showing a significant improvement in sentiment, commentators are predicting Melbourne’s market to be the worst performer of the capital cities in 2021, with SQM predicting price rises of 2-6 per cent. The combination of all-time low interest rates, extensive government incentives and improving seller and buyer confidence combined with pent up demand should ensure that the budding market recovery continues in 2021.
In November 2020, the Sydney property market recorded a second consecutive month of rises in property values, with the median house price reaching $1,000,170, which represents an annual increase of 4.9 per cent. However, despite the improving sentiment in Sydney that has led to the two successive months of property value increases, this figure is still below the $1,020,849 achieved in March 2020 prior to the pandemic and the $1,075,000 achieved at the peak of the market in mid-2017. Sydney’s apartment market is recovering more slowly, with the median apartment price of $728,168 being just 1 per cent higher than a year ago.
While less affected by the pandemic than the Melbourne market, the Sydney market still suffered from 6 months of declining values. However, sentiment has improved in the last few months, with auction clearance rates over the last few months of around 80 per cent, which matches the rates from a year ago. The number of new property listings in Sydney is around 6 per cent lower than a year ago. The shortage of new stock during the pandemic actually helped to ensure that Sydney’s property market didn’t fall too far, by creating a situation where the amount of supply kept up with the lower demand. Now that the lockdowns are finished, the amount of supply is now lower than the stronger, pent-up demand from buyers, creating the situation where competition for available stock is driving prices back up as 2020 winds down.
As with Melbourne and Brisbane, demand for land in Sydney’s growth corridors remains strong on the back of the Federal Government’s HomeBuilder incentives.
Commentators are predicting Sydney’s market to perform strongly in 2021, with SQM predicting price rises of 8-12 per cent. The Sydney market is likely to be a strong performer in 2021 on the back of low interest rates, strong consumer confidence, extensive government initiatives including increased infrastructure spending.
The Hobart property market was the strongest capital city performer from 2017 to 2019.. House prices have continued to rise in Hobart, with a new market high median value of $535,786 achieved in November 2020, which represents an annual increase of 6.5 per cent. This was the third-highest annual increase after Darwin and Canberra. Tasmania’s COVID-free status has helped to ensure sentiment in Hobart’s property markets remained high throughout the pandemic. Hobart has performed well on the back of affordable housing which has attracted inter-state investors who have constantly purchased around 22 per cent of properties. Hobart also has the lowest vacancy rates of any capital city at just 0.6 per cent.
Hobart continues to divide commentators, with some predicting Hobart’s market to slow slightly in 2021, while others are predicting the boom to continue. SQM is predicting the market to slow with price rises of 3-7 per cent. ANZ on the other hand is predicting another strong year with predictions of a 9 per cent price rise. Some commentators have been predicting the boom to come to an end in Hobart for a few years now, and so far it hasn’t happened.
The Perth housing market has finally started to rise from the bottom of the market on the back of an on-going commodities market recovery and further mining project investment. Median house values in Perth reached $482,745 at the end of November. While this figure is only 0.9 per cent up on the same period last year, it does represent an increase of 2 per cent over the past quarter, which was a stronger performance over the quarter than Sydney, Melbourne and Brisbane.
The pandemic interrupted Perth’s recovery with negative growth during May, June and July. However, on the back of three months of strong growth since then, there are strong indicators the Perth property market recovery is now underway again. Among the indicators of a recovery and increasing demand among buyers is a significantly lower time on the market than a year ago (33 days in October 2020 compared to 57 days in October 2019) and improving transaction rates (1,074 properties sold in the four weeks to December 6, 2020, compared with 882 sales the month before). Also, the lowest vacancy rates since November 2012 are attracting inter-state investors, with a 0.9 per cent rate recorded for November 2020.
With market indicators suggesting the Perth recovery is finally underway after years of under-performance, it is no surprise that some commentators are predicting Perth’s market to be the top performer of the capital cities in 2021, with SQM predicting price rises of 8-12 per cent.
The Adelaide property market has been the quiet performer of 2020, avoiding most of the media hype that has concentrated on the Brisbane and Sydney markets. Adelaide had the strongest growth of the five larger capital cities in 2020, with a median house price of $498,029, which represents an annual growth of 5.3 per cent. The figure also represents a new peak of the market. Only the smaller capitals – Hobart, Canberra and Darwin – performed better. The Adelaide apartment market was the strongest performing apartment market in Australia, with a median value of $336,105 representing an annual growth of 4.9 per cent.
The Adelaide market has traditionally been a solid performer, without the peaks and troughs that characterise the other capital city markets. The city has a very low vacancy rate of 0.8 per cent, while time on market has reduced from 55 days this time last year to 47 days.
Commentators are predicting Adelaide’s market to continue to be a strong performer into 2021, with SQM predicting price rises of 6-10 per cent and NAB predicting price rises of 7.4 per cent.
The Canberra property market has been the second-strongest performer of 2020, behind only Darwin, with a median house price of $753,005, which represents an annual growth of 7.8 per cent. The figure also represents a new peak of the market. The Canberra market has been the most resilient throughout the COVID-19 pandemic and median values have actually increased by 3 per cent since the onset of the pandemic. The Canberra apartment market was the second strongest performing apartment market in Australia after Adelaide, with a median value of $465,732 representing an annual growth of 4.3 per cent.
Canberra now has the third-highest median house prices among the capital cities, ahead of Brisbane and only just behind Melbourne Given the high percentage of Canberra’s population is employed within the public sector or industries supporting the public sector, the Canberra market has been more insulated from the economic downturn than other cities. Jobs have remained stable as the public sector has employed staff to oversee the government’s stimulus programmes. This has resulted in low vacancy rates of just 0.9 per cent. However, new stock is at a 5 year low, which when combined with the stable local economy has resulted in supply far outstripping demand.
Commentators are predicting Canberra’s market to continue to be a strong performer into 2021, with SQM predicting price rises of 5-9 per cent.
The Darwin property market has been the strongest performer of 2020 behind Canberra, with a median house price of $490,881, which represents an annual growth of 7.8 per cent. The figure remains below the market peak of $578,825 achieved in May 2014.
The Darwin market tends to be more volatile than the other capitals, thanks to a smaller number of dwellings and transactions, however, the past year has seen sustained growth – with the exception of a brief downturn at the onset of the pandemic – suggesting a market recovery is underway.
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BRISBANE HOUSE PRICES HIT RECORD HIGH
Brisbane’s median house price has pushed past the $700,000 mark to reach a record-breaking $720,000, on the back of 4.4 per cent annual house price growth.
Brisbane’s residential market has recorded improved demand, with transactions higher than pre-pandemic figures, according to the latest Queensland Market Monitor published by the Real Estate Institute of Queensland.
The state’s peak industry housing body’s latest quarterly results says Brisbane’s median house price rose 1.4 per cent in the September quarter to $720,000 across 2751 transactions.
HOUSE PRICES SET TO RISE BY 25%, ECONOMIST HINTS
National house prices could surge by as much as 25 per cent as the low cost of credit makes mortgages reach affordability levels not seen since 2002, according to an economist.
BetaShares’ estimates are based on the median capital city national established house price, combined after-tax income for a male and female couple earning average ordinary time earnings, a 10 per cent housing deposit and the average bank mortgage rate for new owner-occupier loans.
As at the June quarter, the estimated median national house price was $700,000, average after-tax income around $135,000 – with the prevailing relevant mortgage rate for new loans (at present) around 2.9 per cent.
HOUSING MARKET DOWNTURN SHORT-LIVED
The remarkable lift in the residential sector is set to continue as buyers and sellers make up for lost time. Property prices are on the upswing after what was one of the smaller downturns in history according to Corelogic’s Quarterly Economic Review.
Following this slump there was a record increase at 14.5 per cent in the amount of finance secured for properties, driven by owner-occupiers. The Corelogic report shows nationally, housing market values did not see the large decline anticipated at the start of the Covid.
WHAT A KEY REAL ESTATE FIGURE THINKS WILL HAPPEN TO VICTORIA’S PROPERTY MARKET IN 2021
The property market usually cools off over the festive period, but that’s not happening this year and a key figure in Victoria’s real estate market says it doesn’t look like the predicted market slump will happen next year, either.
CEO of Ray White Victoria, Stephen Dullens, says Victorians are making up for lost time.
“The property market, at the moment, is red hot,” he told Stephen Quartermain and Tony Leonard, filling in for Ross and Russel.
PROPERTY PRICES: BEST GROWTH SUBURBS IN SYDNEY, MELBOURNE, ADELAIDE, BRISBANE AND PERTH
House prices are rising across the board in all Australian capital cities at the same time, even though we are in a pandemic.
REA group chief economist Nerida Conisbee said the slight downturn in the pandemic that dragged the economy down for the better part of this year had given rise to property growth.
“The property market is bouncing back very quickly. It’s national whether you’re in a capital city or regional area,” she said.
HOW DID SPRING SELLING GO IN EACH CAPITAL CITY?
More properties were put on the market during this year’s spring selling season, but how many actually sold?
The further easing of the social distancing restrictions across Victoria at the end of September ultimately led to more vendors selling their properties, according to CoreLogic’s latest Property Pulse.
In fact, in the three months to November, the number of new listings added to the market across Australia averaged around 39,000 a month. This was 20.8 per cent higher than in the winter months.