House price rises have reached a record high during the March quarter, surging to an average of $899,509 across the country, with Sydney recording a $100,000 increase to the median house price.
According to Domain’s Quarterly House Price Report, the 5.7 per cent quarterly gain was the steepest rise in almost 18 years and the first time in more than a year that the capital cities have outperformed the regions.
Domain senior research analyst Dr Nicola Powell said all capital cities had posted growth in house prices, and it was the first time they had risen simultaneously for two consecutive quarters since 2009 post-GFC.
“Record low interest rates, improved household savings, low listing volumes, post-lockdown lifestyle changes, consumer sentiment roaring to an 11-year high, returning cashed-up expats and government incentives have all fuelled demand for housing and a strong market performance,” she said.
“National unit prices are now just above the previous price peak reached in mid-2017 at $594,340.
“The 8 per cent drop from mid-2017 to early 2019, as well as the 2.1 per cent COVID decline mid-2020, have now been recouped.”
Median House Prices – March 2021
^Source: Domain House Price Report
SYDNEY
Sydney house prices increased more than $100,000 during March to a new record of $1.3 million, which, according to Powell, was the fastest quarterly acceleration of house prices since Domain records began in 1993.
“This has pushed annual house price gains into double digit percentage growth, making it the steepest increase since the lead up to the previous price peak in mid-2017, at 12.6 per cent,” she said.
“Houses at the upper end are leading the charge, with the strongest quarterly gains recorded in the eastern suburbs, northern beaches, Baulkham Hills and Hawkesbury. All Sydney regions have hit record high house prices.
“For homeowners, this is the fastest rate of capital growth on record … low mortgage rates have improved the affordability of repayments, but saving for a deposit is a challenge due to rapidly rising prices, low wages growth and low interest on savings.”
MELBOURNE
For the first time in 12 months Melbourne’s housing prices have risen at a faster pace than regional Victoria.
House prices surged 4.8 per cent to a median of $974,397, an annual increase of 7.3 per cent.
Dr Powell said she believed the city’s house market would crack the $1-million median house price during the next quarter.
“It will take just over half of the percentage growth recorded during the March quarter to achieve this milestone,” she said.
“The Mornington Peninsula continues to be the standout performer with house prices leaping 16.6 per cent compared to last year.”
Melbourne’s unit market continues to underperform but it was the only capital city to record a new unit price high, banking a 2.2 per cent rise during the March quarter to a median price of $568,793.
Powell said record low interest rates, and state and federal housing incentives had fuelled housing demand in Melbourne as residents reassessed lifestyle choices during multiple lockdowns.
“This will undoubtedly have spurred homeowners to rethink lifestyle choices, bring forward decisions or even readjust housing needs, resulting in booming levels of home loans financed,” she said.
“While this has been led by owner-occupiers, investors have started to make a comeback.”
BRISBANE
Greater Brisbane has recorded a new record high median house price of $632,999. House prices have risen 6.2 per cent from the same time last year, which Powell said offered homeowners “steady capital growth”.
“Brisbane still has a two-speed market with unit prices falling during the quarter and year, down 0.5 percent and 1.1 per cent lower respectively,” she said.
“The divergence of house and unit prices has made the value gap between purchasing a house and unit the largest on record.”
Powell said the Gold and Sunshine coasts continued to perform, despite a slight easing off the pace of price acceleration on the Gold Coast.
“Prices hit new records on the Sunshine Coast, with houses providing some of the strongest rates of annual growth across Australia,” she said.
“Sunshine Coast house prices increased 6.9 per cent during March to $770,000, a staggering 19.4 per cent higher than one year ago. Units on the Sunshine Coast jumped 10.2 per cent during the quarter to $550,000, 18.3 per cent higher than last year.
“This is the quickest rate of price increases in roughly 17 years.”
Median Unit Prices – March 2021
^Source: Domain House Price Report
ADELAIDE
Adelaide house prices rose 3.7 per cent during the March quarter to a new record high of $599,706.
Powell said Adelaide’s south recorded double-digit annual house price growth at 11.6 per cent, but it remained the third most affordable city in which to buy a house after Perth and Darwin.
“For the first time on record it is now more affordable to purchase a house in Adelaide than Hobart,” she said.
“For houses and units, current sale transactions are at the highest level since 2007 … the flow of new listings has not been able to keep pace with buyer demand.
“Interstate migration has been a constant drain on housing demand, however the stark turnaround has netted a positive flow of residents into South Australia for two consecutive quarters – the first half year rise in almost three decades.”
Unit prices in Adelaide increased 1.1 per cent during the quarter to $344,062.
PERTH
Perth house prices have reached their highest point in about five years and unit prices are the highest in almost three years according to Domain’s quarterly report.
“House prices rose 2.4 per cent over the March quarter, the fourth consecutive quarter of growth. Units notched a third consecutive quarter of growth, up 3.9 per cent … this uninterrupted run of price growth has not occurred since 2013 in the lead-up to the previous price peak reached in 2014,” Powell said.
“Houses remain $37,000 lower and units $50,000 lower than the 2014 record highs, with the price gap rapidly closing.
“It would take another three consecutive quarters at the exact same pace of percentage growth recorded over the March quarter for house prices to surpass the 2014 high.”
Powell said while Perth remained an affordable housing market, the rising prices were creating pressure to purchase before they accelerated too far.
HOBART
Median house prices in Hobart have cracked $600,000 to a hit a record high.
Prices soared 7.6 per cent over the March quarter to $601,567 according to Powell.
“This is the steepest quarterly jump since 2017,” Powell said.
“This has pushed annual gains 15.9 per cent higher, the biggest jump since 2018… [and] it appears that house price growth is accelerating.
“At the end of 2019 Hobart was the most affordable capital to purchase a house.”
According to Powell, house and unit prices have increased 73 per cent and 67 per cent respectively during the past five years, surpassing every other capital city in Australia.
CANBERRA
Canberra house prices are inching closer to a median value of $1 million after a 9.7 per cent lift during the March quarter. It has experienced the fastest acceleration of house price growth since Domain began recording the data in 1993, now with a median value of $927,577.
“This has pushed annual house price gains to 19.5 per cent, the steepest annual increase in 17 years,” Powell said.
“Canberra is a breakaway performer compared to the other capital cities, recording the strongest annual and quarterly house price growth.”
Powell said the strongest gains were at the upper end of the market in North Canberra, South Canberra and Woden Valley with a median above $1 million. She said it was largely due to higher average wages, job security and low mortgage rates encouraging people to upsize.
“Another quarter at the same percentage growth rate would push house prices above $1 million,” she said.
“This level of quarterly growth is normally the output of an entire year and is extremely rare for Canberra to experience in one single quarter.”
DARWIN
Following a multi-year downturn, prices have begun to improve in Darwin, according to Powell.
“For houses, this recovery continued and prices have hit the highest point since late 2018,” she said.
“House prices jumped 9.1 per cent during the March quarter to $554,295, the steepest quarterly rise since 2009.
“Unit prices declined a marginal 1.8 per cent over the quarter to $293,731.”
Powell said while prices had increased they were still $124,000 below the 2013 peak.
Article Source: theurbandeveloper.com
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