Australian house prices record strongest quarterly growth in a decade

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on January 02, 2020
Australian house prices record strongest quarterly growth in a decade

Photo by Arnaud Mesureur on Unsplash

Australian dwelling values rose by 1.1% over December and 4.0% over the quarter, representing the fastest rate growth over a three month period since November 2009.

On an annual basis, values tracked 2.3% higher over 2019, with five of the eight capital cities and five of the seven 'rest-of-state' regions seeing the year in positive growth territory, according to the latest figures from CoreLogic. 

Sydney and Melbourne led the strong growth, with both capitals posting a 5.3% rise in values over the year, while values were down in Darwin by 9.7%, 6.8% lower in Perth and 0.2% lower in Adelaide. 

Regional Tasmania led the regional markets, with a 6.1% rise over the year. 

CoreLogic head of research Tim Lawless said despite the mostly positive results, growth was beginning to slow. 

“Although the monthly capital gains trend remains fast-paced, the 1.1% rise in December was softer relative to the 1.7% gain in November and the 1.2% rise in October," Mr Lawless said. 

"This would suggest that the pace of capital gains may have been dampened by higher advertised stock levels or worsening affordability pressures through early summer.”

Dwelling values as at December 31 2019

 

Monthly change

Quarterly change

Annual change

Median value

Sydney

1.7%

6.2%

5.3%

$840,072

Melbourne

1.4%

6.1%

5.3%

$666,883

Brisbane

0.7%

2.4%

0.3%

$497,491

Adelaide

0.5%

1.4%

-0.2%

$433,845

Perth

0.0%

-0.1%

-6.8%

$437,080

Hobart

0.2%

3.4%

3.9%

$474,186

Darwin

-0.5%

-1.4%

-9.7%

$388,018

Canberra

0.1%

2.3%

3.1%

$611,841

Combined capitals

1.2%

4.7%

3.0%

$622,346

National

1.1%

4.0%

2.3%

$537,506

Source: Corelogic

Mr Lawless added that 2019 was a tumultuous year for the property market, influenced by a range of government and Reserve Bank decisions, as well as relaxed lending restrictions. 

“The positive year-end results mask what has been a year of two distinct halves -we saw capital city dwelling values fall by 3.8% over the first six months of 2019 and then rebound by 7.0% over the second half of the year.

"The housing value rebound was spurred on by lower mortgage rates, a relaxation in borrower serviceability assessments, improved housing affordability and renewed certainty around property taxation policies post the federal election.

"Lower advertised stock levels persisted providing additional upwards pressure on prices amidst rising buyer activity.”

Despite the strong rebound over the latter half of 2019, property values across most regions are still 3.1% below the October 2017 peak. 

However, if the national rate of growth continues in 2020, the housing market will record a nominal recovery in March as values push to new record highs. 

“A nominal recovery in housing values implies home owners are becoming wealthier, which may also help to support household spending," Mr Lawless said. 

"However, the flipside is that housing affordability is set to deteriorate even further as dwelling values outpace growth in household incomes, signaling a set-back for those saving for a deposit.”

What's the outlook for 2020? 

Mr Lawless said it's unlikely we'll see the same rise in capital gains that we saw in 2019 this year, even with the expectation that mortgage rates will decrease further over the first half of the year. 

“Housing values are expected to rise through 2020 across most regions, however, the year may bring about a change in the growth dynamic with the larger cities seeing a slowdown in the rapid rate of growth recorded through the second half of 2019.

"In contrast, smaller capitals such as Brisbane and Perth, as well as key regional centres and lifestyle markets could see an improvement in conditions as buyers are attracted to affordable prices coupled with job opportunities and lifestyle factors.”

Mr Lawless said the market slowdown will be especially felt in Sydney, where dwelling values were already 8.2 times higher than gross annual household incomes halfway through 2019.  

However, this should be offset by increased investor activity, who will be attracted by prospects for capital gains and a positive spread between mortgage rates and rental yields. 

In addition to this, advertised stock levels are likely to rise from their low base at the end of 2019, as sellers look to take advantage of the market recovery and summer selling conditions.

Higher advertised stock levels will provide more choice for buyers and remove some of the urgency from decision making process that has supported higher prices. 

New high-rise apartment completions are likely to remain higher than average over the first half of 2020 as the surge in off-the-plan unit projects complete construction. 

But with buyers cautious of newly built projects due to construction quality concerns, precincts with higher supply levels could face downward price pressure. 

The table below displays some of the lowest-interest variable rate home loans currently available in Australia for owner-occupiers making principal and interest repayments.

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • 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%
UNLIMITED REDRAWSSPECIAL 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%
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • 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
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS
NSW/VIC/SA METRO & INNER REGIONAL AREAS

Variable Home Loan (Principal and Interest)

  • $5000 Cashback. T&Cs Apply.
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
NO ONGOING FEESFREE REDRAW FACILITY
  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
NO ONGOING FEESFREE REDRAW FACILITY

Live-in Variable Loan (Principal and Interest) (LVR < 90%)

  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 25, 2022. View disclaimer.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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