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As the year closed, home values across Australia marked total average gains above 20 per cent.
The latest CoreLogic data shows values rose 22.1 per cent with a national median home value of nearly $710,000 in 2021.
After the cyclical high of 2.8 per cent was achieved in March, monthly growth had diversified by the time December rolled around, with home prices rising just 1 per cent in December, down from 1.3 per cent in November.
Conditions in capital cities and regional areas have followed increasingly diverse paths as house price growth has slowed.
Melbourne experienced its first month-on-month drop in housing values since October 2020 with a 0.1 per cent decline, whereas Brisbane house values had a 2.9 per cent increase.
On the other hand, CoreLogic’s research director Tim Lawless pointed out that Brisbane, Adelaide and regional Queensland have reached a new cyclical high in monthly growth for December, indicating a sustained value growth.
“These regions show less of an affordability challenge relative to the larger capitals, as well as better support for housing demand with Queensland in particular showing strong interstate migration,” Mr Lawless said.
Worth noting are regional Australian markets, which have picked up steam by recording their largest increase in nine months with a 2.2 per cent monthly rise, and a 6.4 per cent rise in the three months to December, compared to the 5.1 per cent growth reported in the September quarter.
Regional Queensland is leading the pack with house prices up by 2.4 per cent in December. NSW and Tasmania emerged as the strongest among the regions for the year with 29.8 per cent and 29.5 per cent house price rises.
Highlighting that emerging two-speed market across the state capitals, the report pointed to increasing home prices and low income growth, plus a sudden spike in new stocks coupled with weak demographic trends to explain the slowing trend in Sydney and Melbourne.
In addition, barriers to interstate movement due to state borders remaining closed has had a detrimental impact on demand, which may have caused the Perth property market to slow down.
Overall, housing values in regional Australia have increased by 32 percent since the pandemic’s onset in March 2020, compared to 20 percent in the combined cities.
Inventory levels are also low, with advertised stock levels at 35.9 per cent below the five-year average in comparison to a 14.2 per cent drop in stock in the combined capital cities during the previous five years.
2022 Outlook
As remote working arrangements become more common, and demand for holiday homes stays strong despite international border restrictions, regional markets, particularly those in the lifestyle segment, are likely to continue to benefit from increasing demand in 2022, Mr Lawless has predicted.
But still, he cautioned that these markets might not be spared from a downsizing phase in 2022 as interest rates begin to drop and affordability concerns begin to impact regional markets.
He has also alluded to COVID-19 as a potential “game-changer” of sorts, considering soaring cases of those infected by the Omicron strain. Such circumstances, he said, may result in reverting to stricter policies, such as limited home inspections and mobility that could temporarily disrupt potential transactions.
Weighing in on this scenario, Mr Lawless has commented that the continued impacts of the pandemic may prolong monetary policy expansion and low-interest rates, which did contribute to increased property market demand in 2021.
ABOUT THE AUTHOR
Noemi Paminuan-Jara
Noemi is a journalist for Smart Property Investment and Real Estate Business. She has extensive experience writing for business, health, and education industries. Noemi is a contributing author of an abstract published by the American Public Health Association, and Best Practices in Emergency Pedagogical Methods in Germany. She shares ownership of the copyright of an instructional video for pharmacists when communicating with deaf patients. She attended De La Salle University where she obtained a double degree in Psychology and Marketing Management.
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