Australian house prices surged 3.9% ahead of coronavirus outbreak

author-avatar By on March 17, 2020
Australian house prices surged 3.9% ahead of coronavirus outbreak

Photo by Laura Cros on Unsplash

House prices rose by 3.9% across Australia in the December 2019 quarter, but the impacts of coronavirus on the property market are still to come.

Property prices across the country surged ahead of the coronavirus outbreak, according to the Australian Bureau of Statistics (ABS) Residential Property Price Indexes. 

The 3.9% gain was mostly driven by the Sydney and Melbourne markets where prices spiked by 4.7% and 5.2% respectively. 

House prices lifted by 5.2% in Sydney and 5.5% in Melbourne, while unit prices rose by 3.8% and 4.3% in the two cities. 

Thinking about refinancing to a low-rate, variable owner-occupier home loan? The table below displays some of the lowest-rate variable home loans currently 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
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.^
FixedMore details
NO UPFRONT OR ONGOING FEES

Basic Home Loan Fixed (Principal and Interest) (LVR < 70%) 3 Years

NO UPFRONT OR ONGOING FEES

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%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. Rates correct as of October 27, 2021. View disclaimer.

Overall, prices rose in all capital cities except Perth and Darwin, and ABS Chief Economist Bruce Hockman said the property market is on the upswing.

"While Australia's two largest cities continued to lead the rise in property prices, the turnaround in the housing market has spread to all other cities except Darwin," Mr Hockman said.

"Results are consistent with other housing market indicators, including new lending commitments to households and sales transactions, which have been rising over several months."

According to the ABS, the total value of Australia's residential dwellings rose by $294.4 billion to $7.2 trillion in the December 2019 quarter - the largest rise since September 2011.

The mean price of residential dwellings in Australia is now $691,000.

How will coronavirus impact house prices?

The ABS figures pre-date the unfolding coronavirus (COVID-19) pandemic, the effects of which are already beginning to be felt in the property market.

CoreLogic's recent auction results for example show signs buyers are beginning to turn away from the market.

While house prices were on the rise as recently as the December 2019 quarter, some say it may not be the case for much longer given the current state of the economy. 

Research Fellow in Real Estate, Centre for Applied Economic Research UNSW Nigel Stapledon said COVID-19 is bad news for house prices.

"The bottom line is it will be negative - prices will go down," he said.

"People, up until now, have been talking about the property market developing a bit of momentum, with the interest cuts we had last year and the easing in credit conditions."

Mr Stapledon said rate cuts and stimulus packages can only do so much.

"The reason the bank is cutting is coronavirus is negatively impacting the economy as a whole – there’s no escaping that fact," he said.

"Yes, the government has released its stimulus package and there may be more fiscal stimulus on the way, but there are limits to what any government can do.

"There will be negative effects on employment. It will be a short, sharp shock to the economy."


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
Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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