Australian house prices record strongest quarterly growth in a decade

author-avatar By 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
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
WIN YOUR HOME LOAN INTEREST FREE

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

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
WIN YOUR HOME LOAN INTEREST FREE

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

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • 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.^
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

Rates correct as of September 28, 2021. 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 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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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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