Australia home prices boast bumper 2021 as rates stay low

Jan 04, 2022

REUTERS [SYDNEY] Australian home prices boasted a bumper 2021 as rock-bottom interest rates drove values sky-high, with values in Sydney alone rising an average of A$4,200 (S$4,090) every single week.

Figures from property consultant CoreLogic out on Tuesday (Jan 4) did show some heat leaving the market as national home prices rose 1 per cent in December, compared to 1.3 per cent in November and a peak of 2.8 per cent early in the year.

Prices were up 22 per cent for the year, with a 26 per cent jump in the regions outpacing a 21 per cent increase for the state capitals amid a shift toward country living.

Sydney added only 0.3 per cent in December, although that still brought its gains for the year to 25 per cent and produced a median home value of almost A$1.1 million.

Melbourne saw a rare dip of 0.1 per cent in December, but Brisbane surged 2.9 per cent and Adelaide 2.6 per cent.

The boom has been a windfall for household wallets and consumer confidence. The Australian Bureau of Statistics estimates the value of the housing stock surged by a trillion dollars in the 6 months to September to reach A$9.3 trillion.

The red-hot market finally tempted out sellers in Sydney and Melbourne where listings rose sharply late in the year, contributing to the slowdown in the market.

Still, CoreLogic's research director, Tim Lawless, noted home sales for all of 2021 were around 40 per cent above the decade average at a record 653,000, pointing to strong demand.

"Such a significant mismatch between available housing supply and the level of demand is a fundamental reason why housing prices have risen so sharply," said Lawless.

"As stock levels normalise and affordability constraints along with tighter credit conditions drag down demand, it's reasonable to expect growth conditions will be more subdued in 2022."