Strap in, because house prices are at a 'record high'

author-avatar By
on January 28, 2021
Strap in, because house prices are at a 'record high'

The latest Domain house prices report shows house prices hit a record high at the end of 2020 in all but two Australian capital cities.

According to Domain, the median house price across all capital cities in the three months to 31 December 2020 was $852,940: a 5.8% increase on a year ago. 

This report comes after some economists predicted up to 30% price falls throughout 2020.

All but two capital cities - Darwin, and Perth - are at record high prices for houses.

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

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • 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%
UNLIMITED REDRAWSSPECIAL 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%
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • 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
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.

Variable Home Loan (Principal and Interest)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

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 be 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. *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. Rates correct as of May 29, 2022. View disclaimer.

The results were more of a mixed bag for units, with Sydney's down 0.3% on the year, Brisbane's down 3.0%, and Canberra's units down 1.3%.

Adelaide and Darwin had the strongest gains, up 13.5% and 7.5% respectively, while Melbourne's gain of 4.4% over the quarter means unit prices in the cultural capital are now at a record high. 

Gap between unit and house prices widening 

The national 4.1% price gain over the December quarter for houses represents the steepest quarterly jump in four years, according to Domain's senior research analyst Dr Nicola Powell.

"The price gap between houses and units in Sydney is continuing to widen. Over the past three decades it is rare that house and unit prices move in opposite directions annually," she said.

"Weaker investor activity has disproportionately impacted unit prices because they tend to be the preferred property type. There are also particular locations with increased supply as a result of heightened development in recent years.

"Changed lifestyle preferences post-lockdown and the option of remote working has driven demand to outer suburban and regional locations as buyers seek affordability, liveability, space and greater value for money."

The report comes after the Australian Bureau of Statistics found various government initiatives to stimulate housing stemmed the new house cost rise, affecting the consumer price inflation index.

Dr Powell said Australia's handling of the pandemic and the associated economic fallout placed confidence in home buyers.

"Government support measures, a remarkable recovery in consumer confidence, successful containment of COVID-19 outbreaks and the pessimistic outlook for property prices failing to materialise have played a role in supporting market activity and prices," she said.

"Record low interest rates have spurred buyer activity with cheaper credit easing the affordability of mortgage repayments.

"This has ultimately created competition between buyers, driving house prices higher."

Earlier in the month, Domain found rents are at a seven-year low in the capital cities despite the price gains, with the median unit in Brisbane now more expensive to rent than the median in Melbourne.

Capital City Home Prices, December Quarter 2020

Capital City House Price Unit Price Year-On-Year Gain (House/Unit)
Sydney $1,211,488 $729,840 +6.7% / -0.3%
Melbourne $936,073 $569,677 +3.9% / +2.5%
Brisbane $616,387 $395,677 +5.6% / -3.0%
Adelaide $574,264 $350,122 +6.1% / +13.5%
Canberra $855,530 $485,410 +9.1% / -1.3%
Perth $563,214 $347,585 +6.3% / +4.4%
Hobart  $564,091 $432,552 +12.4% / +2.5%
Darwin $533,845 $285,539 +3.6% / +7.5%
National $852,940 $574,245 +5.8% / +0.9%

Source: Domain


Photo by Marc Sendra Martorell 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. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

Latest Articles

author-avatar
Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree
to the Savings Privacy Policy