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.

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%. 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. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

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."

clhpdec201

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): 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 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.

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