House prices finish 2020 with a bang, rising for third straight month

author-avatar By on January 04, 2021
House prices finish 2020 with a bang, rising for third straight month

Australian home prices rose 1.0% in December, the third consecutive month of increases, according to CoreLogic.

Home values rose 3.0% in 2020, with regional values up 6.9%, more than triple capital city values which saw an increase of 2.0% over the year. 

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
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 25, 2021. View disclaimer.

CoreLogic's Head of Research, Tim Lawless, said forecasts of values dropping by over 30% did not come to fruition, with the year instead characterised by volatility in transactions. 

"The number of residential property sales plummeted by -40% through March and April but finished the year with almost 8% more sales relative to a year ago as buyer numbers surged through the second half of the year," Mr Lawless said.

"Despite the volatility, housing values showed remarkable resilience, falling by only -2.1% before rebounding with strength throughout the final quarter of 2020.

“Record low interest rates played a key role in supporting housing market activity, along with a spectacular rise in consumer confidence as COVID-related restrictions were lifted and forecasts for economic conditions turned out to be overly pessimistic."

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Source: CoreLogic

The surge in regional values was driven by the shift to working from home, which saw demand outstrip supply as people looked for lifestyle properties and lower density housing.

Despite the housing market gathering pace, four of the eight capitals are recording values below their previous peaks. 

Melbourne home values are 4.1% below their March 2020 peak, Sydney's are 3.9% below their July 2017 peak, and Perth and Darwin are 19.9% and 25.7% below their 2014 peaks, respectively. 

Low inventory levels were a feature of the housing market last year, with total listings peaking at the end of November at around 165,000 properties for sale. 

This was 18% lower than the same period last year and 22% below the five year average for that time of year. 

Mr Lawless said listed properties were being snapped up quickly, as there were simply far more active buyers than new listings coming onto the market. 

"Despite new listing numbers being consistently lower relative to their 2019 levels, the estimated number of home sales were almost 8% higher though 2020 compared with the 2019 calendar year," he said.

"This imbalance between effective supply and demand is another factor that has supported a rise in housing prices as a sense of urgency returned to the market.

"With home buyers outnumbering sellers, most areas around the country represent a seller’s market.”

Across the capitals, the median number of days on the market has reduced from a recent high of 43 days over the three months ending July to 33 days through the December quarter. 

Vendors are also discounting their asking prices by a smaller amount, with the discount reducing from 3.6% to 2.8%. 

House rents and unit rents continue to diverge 

Both geographically and across housing types, rental conditions diverged substantially in 2020. 

Geographically, Darwin and Perth have seen house rents up around 10%, and unit rents are up 7.6% and 6.8% respectively. 

“Both Perth and Darwin have recorded below average levels of investor activity since housing market conditions started to cool in mid-2014 which has led to a shortage of rental stock," Mr Lawless said.

"More recently, with stronger interstate migration driving housing demand, rental rates have been under substantial upwards pressure as demand for rentals outweighs supply.”

Despite this strong performance, Perth rents remain 10.4% lower than the previous peak in May 2013 and Darwin rents remain almost 20% below their 2014 peak.

The Melbourne and Sydney unit markets tell a different story, where weak demand, high supply, and stalled overseas migration has driven a sharp drop in rents. 

Melbourne unit rents were down 7.6% in 2020 and Sydney unit rents were down 5.7%. 

Mr Lawless said these weak rental conditions were likely to persist until overseas migration ramped back up and the higher levels of supply were absorbed. 


Photo by C.Valdez on Unsplash

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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