Autumn 2021
After an eventful summer of weather extremes, on-again off-again lockdowns and the swearing in of a new US President, many will be hoping that Autumn ushers in a change of more than the season. As the vaccine rollout begins, there are also promising signs that economic recovery may be earlier than expected.
Australia’s economy has improved and the downturn was not as deep as feared. That was the message Reserve Bank Governor Philip Lowe delivered to Parliament on February 5, citing strong employment growth, retail spending and housing. Unemployment fell from 6.6% to 6.4% in January, although annual wage growth remains steady at a record low of 1.4% after a 0.6% increase in the December quarter. Retail trade rose 0.6% in January, 10.7% higher than a year ago. While home lending jumped 8.6% in December. This helped fuel the 3% rise in national home values in the year to January, led by a 7.9% increase in in regional prices.
Business and consumer sentiment is also improving. The NAB Business Confidence Index was up from 4.7 points to 10.0 points in January, although 60% of businesses say they are not interested in borrowing to invest. Halfway through the corporate reporting season, 87% of ASX200 companies reported a profit in the December half year, although earnings were 14% lower in aggregate while dividends were 4% higher. The ANZ-Roy Morgan Consumer Confidence rating eased slightly in February but is still up 67% since last March’s low.
Higher commodity prices lifted the Aussie dollar to a three-year high. It closed the month around US78.7c, on the back of a 31% rise in crude oil prices and an 8.5% lift in iron ore prices in 2021 to date.
In this issue
Quarterly property review
Quarterly property review
A strong start to 2021
Rewind one year, when COVID-19 arrived down under and social distancing measures threw a blanket of confusion over open homes and auctions, few in the property industry would have predicted a positive end to 2020.Despite a volatile 12 months, when some corners of the market fared better than others, residential property values boomed into Christmas and finished February with a bang.
According to property data firm CoreLogic’s March national Home Value Index, dwelling values continued to rise through the quarter to end February up 4 per cent.i During the same period, the combined capitals rose 3.6 per cent, while the combined regions jumped 5.4 per cent. February alone saw national dwelling values increase by 2.1 per cent - the largest month-on-month change CoreLogic has recorded since August 2003.
Escape from the cities
It started with the arrival of COVID-19 and now continues into 2021, more Aussies are leaving the capitals than ever before. Recent data from the ABS showed that our major cities suffered a net loss of 11,200 people from internal migration during the September 2020 quarter (double the exodus for the same quarter in 2019), which has had a direct impact on home prices.ii Since the onset of the pandemic and lockdowns in March last year, regional housing values have soared 9.4 per cent.Units versus houses
In the post-pandemic property market, detached houses have been outperforming units. Since COVID-19 lockdowns kept people away from the office and got them rethinking how much personal space they need at home, houses have been the clear winner. Experts, however, say 2021 could look brighter for units.Rental market woes and wins
As demand moved towards detached and lower density homes, and shifted away from units, the rental market dynamic has changed substantially.Although Australia’s biggest unit markets have seen asking rents fall significantly over the past year, SQM Research’s managing director Louis Christopher said the rates of decline are easing.iii “There is more evidence the worst is over for landlords in the Sydney and Melbourne rental markets. The falls in vacancy rates for the month in those two cities, combined with the increased tightness in other cities and regions, has now brought rental vacancy rates down to below where they were prior to the outbreak of COVID-19,” he reported in his February Vacancy Rate report.
Historically low rates
A final key driver in the recovery of the post-COVID-19 property market has been record low interest rates. With the official cash rate now sitting at 0.10 per cent, buyers are motivated to upgrade and lenders are able to remain competitive. This status is likely to continue throughout 2021, and beyond, given that RBA governor Philip Lowe announced that the cash rate would not move until actual inflation was sustainably within its 2 to 3 per cent target range.ivCity snapshots
Melbourne
Despite an annual decrease in dwelling values of 1.3 per cent, Melbourne has more recently seen a 3.5 per cent increase over the last quarter, bringing the median value up to $717,676. Houses are now sitting at $829,509 while units are $582,833.Sydney
A strong quarter for Sydney saw dwelling values jump 3.6 per cent, placing the median at $895,933. The annual rate of growth for the Harbour City was 2.8 per cent, taking the median house price to $1.061 million, and units to $738,254.Brisbane
Over the year, Brisbane’s median dwelling value rose by 5 per cent to finish February at $535,618. During the quarter, the city experienced a 3.5 per cent increase. House prices in Brisbane now sit at $593,232 while units are $396,183.Canberra
After a bumper 12 months, Canberra has had a 9.7 per cent jump in dwelling values (with a quarterly increase of 3.7 per cent) which took the median value to $706,454. The capital’s median house price now sits at $797,421 and units are $479,914.Perth
The median dwelling value for Perth increased by 4.2 per cent over the quarter, and 4.6 per cent annually. By February’s end, Perth’s median dwelling price was $491,795, with houses at $513,566 and units at $374,053.To find out how you can make the most of 2021’s property market conditions, contact us today.
Unless otherwise stated, all figures are sourced from CoreLogic’s March national Home Value Index report.
i https://www.corelogic.com.au/news/Feb21Index.
ii https://www.abs.gov.au/statistics/people/population/regional-internal-migration-estimates-provisional/latest-release
iii https://sqmresearch.com.au/
iv https://www.rba.gov.au/media-releases/2021/mr-21-01.html
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