House prices hit record highs in January, surpass pre-COVID levels

author-avatar By on February 01, 2021
House prices hit record highs in January, surpass pre-COVID levels

Housing values rose 0.9% in January, surpassing pre-COVID levels by 1.0%, according to CoreLogic.

It's the fourth consecutive month of increases, with the national home value index now 0.7% higher than the previous September 2017 peak. 

Every capital city and broad rest-of-state region saw an increase in values over the month, with Darwin the strongest of the capitals, up 2.3%.

Sydney and Melbourne both saw a 0.4% increase. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest 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.

Continuing a trend seen early in the pandemic, regional values more than doubled the growth of their capital city counterparts: Regional values were up 1.6% over February while capital city values were up 0.7%. 

Since March last year, regional values have risen 6.5%, while capital city values are down 0.2%.

CoreLogic research director Tim Lawless said New South Wales and Victoria were seeing the greatest divergence in city and regional housing demand. 

“Internal migration data shows more people are leaving Sydney and Melbourne for regional areas, resulting in a transition of activity from the metro regions to the outer fringe and regional markets," Mr Lawless said.

"This demographic trend is further compounded by the demand shock of stalled overseas migration."

“Better housing affordability, an opportunity for a lifestyle upgrade and lower density housing options are other factors that might be contributing to this trend, along with the new found popularity of remote working arrangements."

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Source: CoreLogic

Another trend seen throughout the pandemic is houses outperforming units, with national house values up 3.5% in the last six months while unit values are unchanged. 

Mr Lawless said demand for units had diminished through COVID due to low investor activity and changed living preferences. 

"At the same time supply levels are heightened in some precincts. While demand and supply remain imbalanced we are likely to see units continue to underperform relative to detached housing markets.”

CoreLogic said the January results set the foothold for further price rises this year, supported by low interest rates and relaxed lending laws, with significant virus outbreaks the most significant risk to the market. 

Rise in values supported by low stock and high activity 

CoreLogic found housing supply started the year in a tight position, with the number of new listings added to the market over the four weeks ending January 24 was 3.3% lower than the same period last year and 13.3% below the five-year average. 

Melbourne and Perth were the only capitals to buck the trend, with new listings 20.8% higher than a year ago in Melbourne and 2.2% higher in Perth. 

“Melbourne vendors may still be playing catch-up from the earlier lockdown period, while in Perth vendors seem to be relishing the best selling conditions seen in many years,” Mr Lawless said.

Despite the new stock entering the market, total advertised inventory started the year at record lows, with national total listings 27.8% lower than this time last year and 29.3% below the five year average. 

What stock is on the market is rapidly being snatched up, with new home sales in the past three months 23.9% higher compared to the same period last year. 

“With housing activity continuing to rise at above average levels while listing numbers remain well below average, the natural consequence is upwards pressure on housing prices,” Mr Lawless said.

"This is a seller’s market, but for some reason we are still seeing below normal vendor numbers across most markets.

"With sentiment rising and selling conditions favouring the vendor, it is reasonable to expect new listing numbers will rise as the year progresses which may help to temper housing market conditions.”

Rental market dynamic leveling out 

After COVID saw weakness in the unit rental market, due to disruption from overseas migration and sectors affected by restrictions more aligned with the rental market, January has seen a turnaround.

Unit rents in Melbourne and Sydney were down 7.8% and 5.6% respectively in January, but the rate of decline eased in the month. 

Sydney saw a rise in rents (0.8%) for the first time since March last year and Melbourne unit rents held firm for the month. 

"Part time job numbers have now fully recovered back to pre-COVID levels and more businesses are embarking on a return to work program which could be helping to support renewed demand towards inner city rental accommodation," CoreLogic said.

"Additionally, with rental rates now lower for inner city units, improved rental affordability could be attracting more people back to inner city renting." 


Photo by Risa Hirabayashi 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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author-avatar
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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