Herron Todd White (HTW) has released his final real estate clock for the year, looking at the factors that drove the real estate market in 2021.
Noting that it was a year like no other, Kevin Brogan, National Director of Risk and Compliance for the HTW Group, said the 2021 residential real estate market in Australia was characterized by some of the strongest conditions on record. .
“What sets this year apart is that strong price growth has been recorded in most market segments (geographically, by price and by type of accommodation),” Brogan said.
This strength has been largely attributed to both the tax response and the lifestyle to COVID, including low interest rates, government stimulus initiatives and lifestyle changes.
“Working from home has reduced transportation costs for many, and opportunities for spending on entertainment and travel have been reduced due to blockages and travel restrictions. As a result, there has been an increase in household savings, ”Mr. Brogan said.
“A sharp increase in residential property prices was observed in all capitals, but regional markets performed even stronger.
“Homeowner buyers are looking for more space to live, flexible space to work without diminishing residential enjoyment, and locations with lower population density. “
A notable feature of 2021 has been the regional market, where demand has consistently exceeded supply.
“Even with rapidly rising prices, metropolitan buyers view marginal and regional properties as good value purchases,” said Mr. Brogan.
“With such large and widespread price increases, the list of top performing areas is long, but it includes the Sunshine Coast, Mornington Peninsula and Illawarra.”
In other trends seen throughout the year, HTW noted that the demand for new homes and the lack of supply have resulted in record levels of building construction.
However, this has been hampered by supply chain disruption and shortages of skilled labor and materials.
At the same time, HTW also pointed out that in addition to the increase in real estate transactions throughout the year, there had also been a corresponding increase in business mortgage valuations.
Mr Brogan noted that this reflected a situation where owners were not buying or selling property, but instead tapped into increased equity.
“High transaction costs mean many homeowners ‘stay put’ and refinance to renovate,” Brogan said.
Turning to the last quarter of 2021, Brogan said price growth now appears to be slowing in some markets due to a range of factors including increased supply, decreased affordability and the tightening of Australian Prudential Regulatory Authority lending criteria.
“A final trend to watch out for is that in November and December we are moving into a new phase of the pandemic, particularly with interstate and overseas borders meant to be more permanently open and a shift to” living with COVID. ” , ” he mentioned.
“These population movements could impact demand in local markets over the next few months, leading to further price growth.”
New South Wales
House prices in Sydney were expected to moderate in 2021, but their growth has far exceeded anyone’s expectations.
By October 2021, CoreLogic data showed the median home value in Sydney rose 23.8% to $ 1,071,709, with homes rising 27.8% to $ 1,333,767, while units rose 14.5 % to reach $ 837,262.
“The two main factors that contributed to this growth were continued access to financing at historically low interest rates as well as the limited supply of new listings that did not meet market demand,” said HTW.
Beyond the capital, there was also growth, with Byron Bay among the areas known for its rapid acceleration in prices.
“The slight improvement in the Byron Shire real estate market over the last few months of 2020 turned out to be just a curtain raiser for the main event that was to follow in 2021,” HTW said.
And the sudden acceleration of the market took many by surprise.
“It wasn’t just how fast the market was changing, it was also how fast it was.
“The market has been driven by a larger-than-usual increase in non-local buyers and by the now well-documented slice of big city escapees in search of their own piece of COVID-free heaven. “
To illustrate this point, HTW explained a property at 1663 Hinterland Way, Ewingsdale, which sold in January 2020 for $ 2.495 million.
“At the time of writing, this property is under contract for $ 4.3 million, a gain of 72% over 22 months,” they noted.
In Victoria, extended year-round closures have done little to dampen enthusiasm for the property.
Housing prices in and around Melbourne have grown, as have regional areas, with the Mornington Peninsula particularly standing out.
“The increased appeal of the beach and the regional lifestyle has drawn many people to the peninsula where prices have jumped,” said HTW.
“The trendy and relatively affordable suburb of Rye was no exception to this increased activity and saw its median prices increase by $ 200,000.”
As Melbourne’s unit market has been hit due to an exodus to regional areas, HTW said high vaccination rates and the end of lockdowns have now led to the start of a recovery.
HTW noted that South East Queensland has been waiting for a “hot price hike” for some time, and 2021 has offered the state an opportunity to shine, thanks to several factors in its favor.
Among them were increased infrastructure, increased net internal migration and the announcement of the 2032 Olympics.
This saw Brisbane enjoy value gains that were neck and neck with Sydney at 25.2%.
Beyond the capital, South East Queensland’s growth corridors have also seen price hikes, with vacant land in high demand.
The real estate market momentum also continued further afield, with locations like the Gold and Sunshine Coasts also experiencing extraordinary price gains.
HTW cited an example on the northern Sunshine Coast where a property at 3 Maher Terrace, Sunshine Beach was sold in March 2020 for $ 2.1 million and was recently purchased for $ 4.4 million, which equates to to a staggering 110% increase.
Most regional regions have also benefited from price increases, with Cairns, Darling Downs, Mackay, Rockhampton and Gladstone among the winners for 2021.
In South Australia it was a similar story with the rate of price growth exceeding most people’s expectations.
In and around Adelaide, house prices are up 20.07% year over year, with widespread growth in terms of location, property type and price.
HTW noted that most parts of Western Australia have seen a significant upturn in market activity, with market values increasing in some areas described as “truly staggering”.
Low rental vacancy rates have allowed investors to return to the market, while high demand and low supply have pushed up prices in most of the suburbs.
Among the top performers were the western suburbs of Perth, where Cottesloe posted 33.2% annual growth, Dalkeith 28% and City Beach 37.3%.
“The growth seen in the prestigious western suburbs absolutely dwarfs Perth’s metropolitan average of a bit stingy eight percent,” HTW said.
In regional areas, the results have been mixed. HTW explained that Karratha remained subdued after a strong 2020, while Port Hedland quickly gained ground, with median house prices rising 44.3% during the year.
In South Hedland, the gains were even larger, with prices rising 71%.
HTW said the Northern Territory saw strong activity in the first half of 2021, with the high end seeing only limited disruption from Covid-19.
The prestige market performed well, as did the housing and land developments, which were boosted by government grants to first-time homeowners.
At the end of the year, unit prices were showing promising signs of recovery.
“Traditionally, it follows the housing market when buyers start to be excluded from the housing market,” HTW reported.
“Across Darwin, transactions increased 89.1% from a year ago and the median unit price is now $ 390,000, which is a 30% jump from 12 months ago .
The territory of the Australian capital
In ACT, 2021 saw new housing developments fill up quickly, while suburban records were broken for established housing.
Sourcing materials and labor has proven to be a challenge for the construction industry, with the territory now experiencing a backlog of house constructions with some builders already booked for the duration of 2022.
“We are also seeing construction tenders that are valid for much shorter periods due to escalating construction material costs,” said HTW.
Meanwhile, homeowners also use their property’s available equity, buy investment property, improve or renovate.
HTW explained that more mainlanders are choosing to relocate to Tasmania because of its idyllic lifestyle and relatively affordable accommodation.
This has seen house prices rise in many areas in 2021, and in Hobart, that growth has outpaced most other capitals.
“Properties are always selling well above asking prices (normally 10% or more in most cases),” HTW said.
“The threat of tighter lending criteria and possible interest rate hikes could slow the housing market for the foreseeable future, but the lack of supply may minimize the impact.”