RESIDENTIAL PROPERTY

House prices rally continues, poised for strong 2021

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ACROSS the country home sales have recovered from a rocky 2020, as house prices are tipped to rise by 10% over 2021.

The newest data released by CoreLogic has revealed home sales have increased 17% month over month, pulling January figures to their highest level in almost 20 years. This comes after sales rose by 23.7% in October of 2019, as the floodgates reopened from a period of COVID-19 induced market hesitance.

Across the country home sale have also been steadily increasing, with all capital cities seeing prices climb by 0.7% month over month in January.

While there is typically a rise in January with the end of the holiday season, the seasonally adjusted figure of 0.5%, is only marginally below the December rate of 0.6%.

This slowing could be attributed to lockdowns in Sydney, with prices rising in every capital city as Sydney experienced a sudden stand still, with a 0.2% month over month increase in January. That is a year over year increase of 1.8%.

While Melbourne experienced a second month of 0.4% price increase, though saw a year over year fall of 2.2%.

Brisbane saw a month over month increase of 0.7% and a year over year increase of 4.0%.

While Perth house prices rose by 1.2% month over month and 3.3% year over year.

Dwelling prices in Darwin were up 2.3% in January with a year over year increase of 11.4%, with Hobart up 1.6% over the month, Canberra up 1.2% and Adelaide up 0.9%.

Regionally, dwelling prices were up 1.6% in January and 7.9% year over year, after a less volatile 2020. This was thanks to minimal exposure to stilted immigration and soaring demand after trends turned towards relocation to beaches and the country enabled by a shift to remote working.

Capital city unit prices continued to lag behind, as the trends towards more space prevail into the new year, with unit prices rising by 0.1% in January and falling by 0.1% year over year.

Stalled immigration numbers is still impacting the rental market according to Shane Oliver, head of investment strategy and chief economist at AMP Capital, with year over year unit rents falling by 7.8% in Melbourne and 5.6% in Sydney.

New listings have failed to live up to consolidating sales numbers, with falling back to 2020 average figures in January, after rising to seasonally adjusted record highs in December.

These listing figures are however consistent with an upcoming year over year surge of more than 15% in price growth, reinforced by housing finance commitments. Rising finance commitments are also likely to see significant increases to loan growth.

While CoreLogic forecasts a 10% rise in house prices for 2021, a lower rise of 6.2% is also possible if prices continue to rise at a 0.5% month over month rate. Average capital city dwelling prices could be set to pass their September 2017 record, if the current rate of increase holds.

Sydney and Melbourne are forecasted by AMP Capital to only see moderate increases of 2% to 3% over the course of 2021, while Adelaide, Brisbane, Perth, Darwin and regional areas could see gains nearing CoreLogic’s predicted 10%.

Meanwhile Canberra and Hobart are predicted to see price increases in the range of 5% to 7%.

Both regional dwellings and outer suburban houses should see a stronger year than inner city units, forecasts Oliver, as the focus on lifestyle and working from home is here to stay for the foreseeable future.

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