Over July, property prices increased in all states and territories, and once again, the same capital cities performed strongly. Canberra was the best-performed property market last month, rising in value by 2.6% and adding to a 20.5% increase in the past 12 months. Hobart and Darwin increased in value by 1.7% in July and grew in importance by 21.9% and 23.4%, respectively, over the past year, making them the two most robust markets in the country. Sydney jumped by 2.0% and has seen 18.2% annual growth; however, CoreLogic has noted that the market here is finally starting to cool down. After seeing peak monthly growth of 3.7%, Sydney has had the most significant relative fall in growth rates.
Meanwhile, Brisbane continues to perform well, growing at 2.0% in July and 15.9% over the last 12 months. Once again, Perth is underperforming all other property markets, having seen only 10.8% growth since last year. Dwelling sales are tracking approximately 40% above the five-year average, while active listings remain about -26% below the five-year average. Head of Research at CoreLogic, Tim Lawless, notes that affordability is also becoming an issue in many areas and negative sentiment thanks to ongoing lockdowns. “On the flip side, demand is being stocked by record-low mortgage rates and the prospect that interest rates will remain low for an extended period.
The mismatch between demand and advertised supply remains a key factor placing pressure upwards on housing prices,” Mr. Lawless said. After performing well above expectations in 2020, regional markets have slowly started returning to growth levels similar to the metro areas. In the first seven months of 2021, CoreLogic data shows an almost equal growth rate in dwelling values across the combined regional and capital markets, with discounts up 14.5% and 14.0%, respectively. Regarding types of properties performing well, it continues to be detached housing that outperforms units and apartments. Houses increased in value by two to three times units in most cities with the expectation of Hobart over the last year as buyers continue to have more space and lower-density living.
The other factor that continues to help prop up property markets around the country is still the low stock levels. Advertised listing numbers remain well below average across most parts of the country. Recently the number of newly advertised properties has fallen sharply across Sydney and Melbourne amidst lockdowns, with many vendors waiting until conditions ease. Mr. Lawless believes that while listings are low, demand could also potentially change going forward. “With buyer demand so strong and active listings well below average, prospective buyers are likely to feel a sense of urgency due to the level of competition in the market.” “However, with affordability constraints starting to impact purchasing capacity, it’s possible to market activity could reduce through the second half of the year, helping to rebalance the market and take some heat out of the rate of house price growth,” Mr. Lawless said.
