Australian property prices surged in 2020 on the back of record-low interest rates and plentiful government homebuyer stimuli, and new data shows this trend has continued into 2021.
Economist at realestate.com.au Anne Flaherty said the property market has seen extremely strong price growth over the first half of this year.
“2021 came off the back of one of the most unusual years we have seen, in which the Reserve Bank slashed interest rates and people were saving more than double the portion of their income [due to international border closures] than they had pre-COVID,” Ms Flaherty said.
“Last year we saw a lull in market activity [during lockdowns], but this year we’ve seen people come back to the market in droves, and that high level of demand has pushed up property prices across the country.”
New analysis from realestate.com.au paints a picture of how the property market has fared in 2021 so far, and things are far from grim.
- Use the interactive below to see how well your suburb has performed in the first half of 2021
Data revealing the suburbs with the biggest growth in average estimated value for both houses and units across capital city regions, shows scenic suburbs further away from CBDs have experienced the biggest jumps in the first half of 2021.
Suburbs had to have at least 30 high-confidence valuations in December 2020 and June 2021 to be included in the data. A high-confidence valuation is backed up by more data than a standard valuation, including historic sales of the property itself, sales of similar properties in the area and price trends in the suburb.
“Inner-city areas are not as attractive as they once were because of the increase in people working from home,” Ms Flaherty said.
“There is a huge volume of demand in regional and scenic areas, and there are not as many properties coming up for sale as there are buyers to buy them.
“In a sense, people are realising they’re going to have to put in a really competitive offer if they want to stand a chance of competing. So, buyers are upping their offers just to be competitive and that’s pushing up values.”
Home values have surged in scenic suburbs
Looking at the suburbs with the biggest growth in median estimated house value in each capital city region, Phegans Bay in Sydney’s Central Coast region experienced a 43% jump; Shoreham, on Melbourne’s Mornington Peninsula, had a 44% hike; and Laceys Creek, in Brisbane’s Moreton Bay region, recorded a 33% increase.
Ms Flaherty said while these suburbs are attractive areas, their commutability is also a big drawcard for buyers.
“They’re within about an hour-and-a-half from the city and they’ve got good transport infrastructure, but most are along the coast or in scenic areas. So, they’re appealing to people looking for that lifestyle, but still wanting to be close to amenity,” she explained.
Tasmania’s Huntingfield had the biggest jump in median estimated value for houses in the Greater Hobart region with a whopping 77% rise in June 2021 compared to six months prior.
Property agent at Fall Real Estate Jo Brownless, who sells homes in area, said that figure is not surprising.
“The whole area is undergoing amazing growth with infrastructure and amenity. It’s a real lifestyle area; lots of young families, lots of retirees. It’s really an area that draws buyers from every demographic,” Ms Brownless said.
“People are getting pushed further and further out into outer suburbs now. Demand for properties is certainly outstripping the properties we have available to sell,” she added.
“Inner-city prices have made it so substantially difficult to buy in the inner city, so people are starting to look further out and those suburbs are starting to see prices that are more reflective of inner-city dwellings.”
The suburbs with the biggest jumps in median estimated unit value followed a similar ‘lifestyle’ trend, with Tamarama, in Sydney’s eastern suburbs, recording 58% growth; Rye, on Melbourne’s Mornington Peninsula, showing a 59% rise; and Beaudesert, in Brisbane’s Scenic Rim region, tracking a 24% increase.
COVID buyers crave bigger homes, investors eye off inner-city units
A seperate analysis of the most in-demand suburbs per capital city shows scenic areas further away from CBDs have also been a big hit with those seriously looking to buy a home in 2021.
Melbourne’s Brighton, known for its waterside mansions and celebrity homes, was the most popular suburb for serious house buyers in that city, with 275,746 highly-engaged buyers looking in that suburb in the first half of 2021. Family-oriented Camp Hill was the most in-demand suburb (195,646 buyers) for Brisbane; and Kellyville came in at number one for Sydney (248,626 buyers).
Ms Flaherty said the data suggested COVID house hunters have been attracted to bigger homes with more space as they are spending more time at home during the pandemic.
“Homes in CBDs and in fringe markets tend to be quite small because the value of land and is very high. With people working from home and spending more time at home in general, they are looking for bigger properties with more bedrooms,” she explained.
But inner-city suburbs are still appealing to certain buyers with the most popular suburbs for serious unit buyers all located in inner-city markets.
Ms Flaherty said investors are likely taking advantage of cheaper prices, brought on by an oversupply of apartments in CBDs.
“We’re definitely seeing a dip in the inner-city markets, which means that prices are below what they otherwise would have been,” she said.
“At the moment, rental vacancies are still very high in a lot of CBDs, particularly Melbourne and Sydney. However, from an investors perspective, eventually international students will return, overseas migration will resume and people coming into Australia tend to like to live in central locations.”
Demand for homes in well-connected, middle-ring suburbs is growing
While many of the most in-demand suburbs for house buyers have strong aesthetic qualities such as beautiful homes, tree-lined streets and water views, the suburbs with the biggest growth in demand tell a slightly different story.
Essendon West, in Melbourne’s north west, recorded a 132% jump in demand in the first six months of 2021 compared to the previous six months.
“These sorts of middle ring suburban areas are appealing to buyers because you’ve got the best of both worlds,” Ms Flaherty said.
“You’ve got space around you, there are bigger houses, but these suburbs are still well connected with public transport and they have still got great amenity close by.
“If you think about where families want to live, they don’t want to be in the middle of nowhere. They want to be somewhere with good access to schools and shopping centres and things like that.”
Elsewhere, Wagstaffe, on NSW’s Central Coast, recorded the biggest growth in demand (268% growth) among Sydney suburbs; and Churchill, in Queensland’s Ipswich region, came in at number one (107% growth) for Brisbane.
In terms of growth in demand for units across capital city markets, Parklea (213% growth) was the suburb with the biggest increase in Sydney; Eumemmerring (74% growth) had the biggest jump in Melbourne; and Banyo (111%) recorded the largest increase in Brisbane.
Homes are selling at breakneck speed, especially in Hobart
Ms Flaherty said low supply coupled with strong buyer demand across most of the country is not only pushing up property prices, but also shortening the amount of time a property stays on the market.
In some suburbs, houses are spending just days on market before being snapped up, according to data from realestate.com.au.
Houses in the Melbourne suburb of Skye stayed on market for a median of nine days in the first half of 2021, making it the suburb with the shortest days on market in that city. Sydney’s Eagle Vale recorded a median of 10 days and Brisbane’s Edens Landing came in at 13 days.
Ms Flaherty said these suburbs are also outer-suburban areas where COVID buyers can find bigger houses and more space, but the volume of supply is definitely a reason as to why homes in these suburbs are selling at breakneck speed.
“You’ve got growing demand for those properties in these suburbs that don’t come up for sale as often as properties in inner-areas do, which is why you would see days on market falling in those places,” Ms Flaherty explained.
“When properties do come up for sale in these suburbs, buyers are moving extremely quickly.”
Such is the case across much of Hobart where the top five suburbs with the shortest days on market for houses recorded a median of less than two weeks, according to the analysis. These included Claremont (11 days); New Town (11 days); Howrah (11 days); Lindisfarne (12 days); and Lenah Valley (13 days).
“We’re seeing properties in Hobart sell faster than anywhere else in the country,” Ms Flaherty said.
Ms Brownless said the majority of her homes are selling in “less than a week in real time”.
“We put [a property listing] up mid-week, it has two open homes and we’re pretty much done by Sunday night,” she said. “It’s the quick or the dead, it really is.
“We are certainly seeing activity from international purchasers making enquiries and indeed buying our properties with a view to one day relocate here in Hobart.”
Looking at the suburbs with the shortest days on market for units per capital city, Sydney’s Dee Why recorded an average of 14 days; Melbourne’s Langwarrin had an average of 15 days; and Brisbane’s Carina came in at 26 days.
Lockdown lulls will likely boost spring sales
The Australian property market is being marred by COVID-19 for a second year with several states, including the country’s two biggest markets in Melbourne and Sydney, currently in the midst of extended lockdowns.
This has put limitations on market activity as buyers cannot easily inspect properties, auctions have been moved online and many vendors have likely been spooked, Ms Flaherty said.
She added while winter is seasonally a slower period, it’s likely many sellers will hold off listing their properties until restrictions lift.
“What we’re going to see over the next few weeks is a lull in the property market because nearly half the country is in lockdown,” she said. “It’s not going to be an attractive time to bring a property to market for many sellers.
“What we’ll probably see is people who would have otherwise brought their properties to market to sell, hold off for a little while. And what that’s going to do is probably increase the volume of properties coming for sale during the spring season.
“The number of properties listed for sale generally increases when we hit spring. But because of the lockdowns this winter, this could lead to an especially large spring selling season.”
Ms Flaherty said buyers will still be able to purchase property, but their options will be limited and activity will be much lower than pre-lockdowns. And while prices are expected to continue to rise, it will be at a slower pace due to the lockdowns.
Beyond the lockdown, she predicted there is likely to be a strong rebound across sales, listings volumes and prices as was the case in Melbourne following its near four-month second lockdown last year.
The post How the Australian property market has fared in 2021 so far appeared first on realestate.com.au.