Australian house prices bounce back

author-avatar By on October 29, 2020
Australian house prices bounce back

Photo by Vidal Balielo Jr. from Pexels

House prices have risen in most capital cities over the September quarter as low interest rates, government incentives and easing COVID restrictions lure buyers back into the market.

Domain's House Price Report for the September 2020 quarter shows house prices in every capital city except Melbourne rose during the September quarter.

Unit prices were also slightly up nationally with the exception of Sydney, Melbourne, Canberra and Hobart which all saw price drops. 

What's more, house prices have continued to grow across regional areas in NSW and Victoria, highlighting how Australians are continuing to move to regional areas as a result of flexible working arrangements driven by COVID. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 16, 2021. View disclaimer.

Nationally, median house prices rose by 0.9% over the September quarter to $811,966. 

medianhouseprices

Source: Domain

Median unit prices rose by 0.1% over the September quarter to $561,518.

Annually, these median prices are up 4.6% and 2.2% respectively.

The findings follow another recent report from Domain which found that apartment rental prices have experienced their steepest fall in 16 years. 

medianunitprices

Source: Domain

Sydney

Sydney house prices rebounded by 1.2% over the September quarter, regaining just over $13,000 of the almost $22,000 value lost over the June quarter. 

Sydney unit prices have continued to decline over the September quarter, down 0.2% to $732,423.

Domain Senior Research Analyst, Dr Nicola Powell said the divergence of median house and unit prices has pushed the gap to the largest on record at 58%.

"This widening price gap will make the financial leap from a unit to owning a house much harder," Dr Powell said.

Ms Powell said the low interest rate environment, government tax cuts and other incentives, the easing of COVID restrictions and a change in housing preferences post-lockdown has lured buyers back into the market.

"Consumer confidence has made a remarkable rebound, boosted by the federal budget, success in containing the coronavirus and the prospect of further interest rate cuts.

"Strong buyer demand has absorbed rapidly rising new supply. With fewer investors and foreign interest, first-home buyers are taking advantage of the reduced competition, government incentives and low mortgage rates. With high vacancy rates, weak gross rental yields and fewer opportunities for capital gains, it may be some time before investors return.”

But Sydney's property market still faces risk with home loan holidays and government support packages coming to an end.

"While there is currently no evidence of an increase in distressed selling, the risks increase once financial support is removed.

"Demand will also take a hit as overseas migration collapses. The proposed relaxing of lending standards early next year and the imminent prospect of an interest rate cut will encourage people to borrow, however. With less scrutiny placed on borrowers it will become easier to take out a mortgage, making access to credit simpler and quicker. This is likely to boost demand for housing and, in turn, support home values."

Melbourne

Despite facing some of the toughest COVID lockdown restrictions in the world, Melbourne house and unit prices have remained resilient.

House prices held steady at $875,980 while unit prices slipped by a marginal 0.1% to $536,659 over the September quarter.

"This is a marked turnaround for house prices following the steep quarterly fall posted in June," Dr Powell said.

Property prices still remain higher than last year, up 1.6% for houses and 2.8% for units.

Dr Powell said a pullback in buyer and seller activity has supported prices.

"As lockdowns became stricter throughout the September quarter, the greater the impact on activity. Stage four restrictions had a dramatic and instant effect on homes listed for sale, at the peak dropping about 70 per cent compared to last year," she said. 

"This market hibernation, along with government support measures, has helped to avoid any substantial price falls. The easing of restrictions has already revived activity thanks to pent-up demand that built during lockdown increasing in October.”

While distressed sales have been stalled by government support measures and mortgage repayment holidays, Dr Powell warns the risk of significant price falls becomes greater if these supports are removed and people are forced to sell their homes en masse.

"But COVID-19 associated job and wage losses have been skewed towards lower income households and a younger demographic, both more likely to rent than own a home. Upsizers are less likely to be financially impacted and will be cushioned by record low interest rates," she said. 

"They could also benefit from achieving a better price on their current home and find a bigger discount on higher-priced homes. Demand could also be fuelled by relaxed lending standards and further interest rate cuts, although plummeting overseas migration will be a drag for demand."

Brisbane

Brisbane house prices increased by a marginal 0.4% to $596,316 over the September quarter, making last quarter's fall of 1.4% short-lived.

Unit prices increased 1.7% to $383,585 reversing roughly one-third of the 4.1% fall in prices in the June quarter.

Annually, house prices were up 3.7% and units were down 6.1%. 

Dr Powell said the median value difference remains one of the largest on record at 55%.

"While this will make the financial leap to purchase a house harder, buyers are paying 2014 prices for a unit."

Dr Powell also said low interest rates, government incentives and the lifestyle in Queensland is continuing to lure buyers.

"First-home buyers are taking advantage of incentives and those with secure incomes will be lured by historically low interest rates. Domain’s Buyer Demand Indicator shows houses remain a firm favourite of prospective homehunters, with demand rising post-lockdown and it remains significantly elevated compared to last year," she said. 

“Buyers have been attracted by south-east Queensland's affordability and lifestyle, likely to be accelerated by the current health crisis. As we emerge from lockdowns and continue to live with COVID-19, our property wishlists have changed, particularly for those able to work from home.”


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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author-avatar
Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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