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.

Provider
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayment
 
2.68% 2.74% $1,618 More details

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 01 June 2020. 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 2019. They are (in descending order): Credit Union Australia, 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 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

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 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.

*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.

Latest Articles

author-avatar
Alex joined Savings.com.au in 2019. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

Collections:

Get free insights & tips monthly

By subscribing you agree to the Savings Privacy Policy

Loading data please wait...

{{returnData.productName}}

Overview

Current Rate

{{returnData.currentRate | percentage:2}}

Comparison Rate*

{{returnData.comparisonRate | percentage:2}}

Rate Type

{{returnData.rateType}}

Advertised Rate

{{returnData.advertisedInterestRate}}

Comparison Rate*

{{returnData.comparisonRate}}

Monthly Repayment

{{returnData.monthlyRepayment}}

Interest Type

{{returnData.interestType}}

Total Interest Rate

{{returnData.totalInterestRate | percentage:2}}

Base Interest Rate

{{returnData.baseInterestRate | percentage:2}}

Bonus Interest Rate

{{returnData.bonusInterestRate | percentage:2}}

Total Interest Rate

{{returnData.totalInterestRate | percentage:2}}

Introductory Rate

{{returnData.introductoryRate | percentage:2}}

Introductory Term

{{returnData.introductoryTerm}}

Base Interest Rate

{{returnData.baseInterestRate | percentage:2}}

Term

{{returnData.term}}

Advertised Interest Rate

{{returnData.advertisedInterestRate | percentage:2}}

Interest Frequency

{{returnData.interestFrequency}}


Fees and Features

Ongoing Annualised Fee

{{returnData.annualFee}}

Upfront Fee

{{returnData.upfrontFee}}

Offset Account

Redraw

Principal & Interest

Interest Only

N/A{{returnData.interestOnly}}

Max loan to value ratio (LVR)

{{returnData.maxLVR | percentage:0}}

Lump sum repayments

N/A

Additional repayments

Maximum Loan Term

{{returnData.maximumLoanTerm}}

Upfront Fee

${{returnData.upfrontFee}}

Ongoing Monthly Fee

{{returnData.ongoingFees}}

Early Repayment Fee Applies

N/A

Vehicle Types

{{returnData.vehicleType}}

Maximum Vehicle Age

{{returnData.maximumVehicleAge}}

Pre Approval Available

N/A

Online Application

N/A

Account Keeping Fee

{{returnData.accountKeepingFee}}

Minimum Monthly Deposit

{{returnData.minMonthlyDeposit}}

Linked Account Required

N/A

Interest Calculated

{{returnData.interestCalculated}}

Interest Paid

{{returnData.interestPaid}}

Online Application

N/A

ATM

N/A

EFTPOS

N/A

Account Keeping Fee

{{returnData.accountKeepingFee}}

Minimum Monthly Deposit

{{returnData.minMonthlyDeposit}}

Linked Account Required

N/A

Interest Calculated

{{returnData.interestCalculated}}

Interest Paid

{{returnData.interestPaid}}

Online Application

N/A

ATM

N/A

EFTPOS

N/A

Minimum Deposit

{{returnData.minDeposit | currency : '$' : 0}}

Upfront Fees

{{returnData.upfrontFee | currency : '$' : 0}}

Annual Fees

{{returnData.annualFee | currency : '$' : 0}}

Notice Period to Withdraw

{{returnData.noticePeriodToWithdraw}}

Online Application

N/A

Automatic Rollover

N/A

Maturity Alert

N/A