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Facts, Figures and Projections for the Australian Property Market

November 3, 2021

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Property investment to use for personal or commercial reasons (or as an investment) has long been considered one of the best stepping stones to building lasting wealth.
“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” Andrew Carnegie, Billionaire Industrialist, 1835–1919
However, if you don’t read into the market correctly, there’s a chance you could lose out significantly on your investment property. So, to make the best choices that will help grow your wealth, it’s important to get a handle on housing prices, as well as current and future trends of the Australian property market. Today, we’re delving into a fact-finding mission to uncover the latest trends and projections about Australia's real estate market, to help you make more informed decisions.

Australia Property Market Overview

Featured Off-Market Properties According to CoreLogic’s Housing Market Update, the real estate sector continues to be a significant contributor to the Australian economy. As of August 2021:
  • 54.3% of the wealth held by households was in housing-related assets
  • The total real estate value of residential and housing units was $8.8 trillion
  • The commercial real estate sector stood as a value of $978 billion
  • Unpaid mortgages amounted to $1.9 trillion
These strong growth metrics are an indicator of a firming market. Numbers crunched by research firm SQM research showed that buyers far outstripped sellers, which is a key contributing factor to the booming Australian house prices. In all the major cities like Sydney and Melbourne, fewer people listed their properties for sale.

Comparison of Property Listings In Major Cities

City 2020 2021 Change(%)
Sydney 30,059 27,440 -3.5
Brisbane 28,812 23,519 -7.1
Melbourne 38,447 37,915 -7.4
Adelaide 15,317 12,033 -7.1
Canberra 4,153 3,250 -9.7
National 304,210 245,953 -6.3
As fewer sellers came to the party, buyers pushed prices, causing a strong growth in property values which can be attributed to:
  • Lowering mortgage rates and borrowing costs
  • Increased consumer confidence
  • A trend towards property-owning among the younger population
The onset of the pandemic also caused a dent in nominal house prices. KPMG reports show that with the exception of Canberra, all major cities felt a slowdown in prices. For instance, prices in Melbourne dropped 2.8%. Targeted government intervention helped plug price declines. For instance:
  • The introduction of the HomeBuilder program helped individual property investors, including first-time homebuyers, by providing grants for building and renovating houses. These grants caused an increase in the housing stock, preventing a downward price spiral.
  • Monetary policy interventions such as the Term Funding Facility and cash rate reduction to 0.1% caused a decline in mortgage rates. These lower mortgage rates contributed to price growth.
All in all, the Australian property market remained resilient despite the pandemic. CoreLogic data revealed that:
  • Auction volumes remained strong at approximately 74%, only showing signs of decline during the extended lockdown period
  • 2021 consumer sentiment is high, with properties taking only 29 days to sell compared to 51 days in 2020
  • Listings remained lower than 2020
Overall reduction in advertised stock
Area 2021 Housing Stock Decline
National -27%
Capital cities -17.4%
Regional -37%

Australian Rental Market

SQM Research figures showed a significant increase in rental rates reaching a 12-year high of 5.6%. Reports show that households now spend between 30% and 50% of their income on rentals. Rental property shortages, lowering vacancy rates, and record price hikes in rental rates are putting pressure on tenants in the expensive capital city and regional Australia. Note: Vacancy rate refers to the number of houses ready for occupation but sitting idle, without tenants.
“Rental supply was a big challenge for the regions which were experiencing large population inflow from interstate or from the cities.” Louis Christopher, SQM Research Managing Director
Landlords are also feeling the pinch despite rising rates as yields have also shown a negative downturn the past year.

Australian National Rental Yields Per Year

Year Rental Yield
2015 4.1%
2016 4%
2017 3.8%
2018 3.9%
2019 4.2%
2020 3.8%
2021 3.4%
All projections indicate that the ripple effects of the pandemic will continue to harm the rental market. In the absence of international students in all significant education hubs, housing units will remain empty for longer driving up rental rates. For first-timers in the housing market, the record highs in rentals coupled with the current record low-interest rates are a cue to turn from rental property to becoming first-time home buyers. This is because if rates keep rising, you will pay more in rentals over the long run than you would be paying for mortgage costs. To overcome housing affordability issues, the government has several economic recovery projects you can take advantage of. Depending on the scheme you qualify for, you will only be expected to raise a small fraction of the deposit to buy or build your home. Some of the grant schemes run by the Government and the National Housing Finance and Investment Corporation include: Once you’re approved for a grant, find a way to get your hands on the most cost-effective properties. For example, off-market and secret listings are some of the best ways to get access to properties before other buyers. Getting first dibs on homes before other purchasers start the bidding process will help you lock in a great house at a reasonable price. With the reserve bank tying interest rates down to boost economic growth post-pandemic, off-market listings are your best bet to secure your next home. To do this, use a reputable marketplace like Listing Loop. You only have to register or download the Listing Loop app and specify the type of property you are looking for. Once a property matching your specifications comes to the market, you will get a notification, and you can start negotiations before other buyers get wind of the property. It’s hassle-free.

What to Expect From Australia’s Property Market

Australia’s regional and main metropole property strategists project that property prices will continue to firm going into 2022. The firming house prices are backed by strong demand for housing as a result of:
  • Low-interest rates
  • An increase in home loans as more investors enter the market
  • Stronger growth in the economy resulting in a drop in the unemployment rate
  • General optimism about buying property
  • The vaccine rollout and response to the pandemic which inspires confidence in economic improvement
  • A significant number of first-time buyers owing to government new homeowner initiatives
“Buyer demand is mostly being fuelled by a surge in owner-occupiers rather than investors looking to take advantage of historically low interest rates, generous government incentives and an increased state of normality.” Tim Lawless, Head of Research, CoreLogic
The National Australia Bank (NAB) has tipped housing price growth for 2021 to close the year at 18.5%. NAB’s predictions indicate a national property index of 71 in 2021 and 72 in 2022. The bank’s reports also point to slowing growth in the real estate market in 2023. KPMG research signals firming house and rental prices going into 2022 and 2023, after which prices will slow down and return to an equilibrium point based on the average experienced over the years. As the predictions confirm, property values tend to follow cyclical patterns where prices rise and fall regularly. This means a slowdown is inevitable, but demand will begin to pick up again as the cycle continues. With the Summer Olympics coming to Australia (Brisbane) in 2032, Brisbane prices and surrounding areas are expected to continue on an upward trajectory. The ripple effects will also be felt across the entire country’s real estate market. In short: House prices will dip but they will rise again.

Buy or Sell Your Property In Australia

If you’re on the side as a seller, the strong demand currently being experienced is an excellent incentive to sell your property before prices start to dip. For those looking to purchase, as property values rise, the goal is to keep your purchase price at the lowest possible. Whether you are a buyer or a seller, Listing Loop can help you. The platform matches buyers to properties that are listed through agents. You are start direct negotiations with the selling agent without the pressure of auctions or conventional marketing. So, get in touch with Listing Loop and find out how the platform can help you meet your goals in the property market in Australia.


Photo by John Fornander / CC BY

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