Housing is key to economic recovery from COVID-19

The latest CoreLogic Economic & Property Review looked at key housing market trends through November 2021, which offered a summary of the industry’s impressive $ 9.4 trillion contribution to the national economy. . It also included data on housing and economic performance in each state and territory, as well as an overview of the housing finance environment.

In the year to November 2021, research results found that the national home value increased by 22.2%, with regional Australia seeing a 25.2% increase and the combined value of homes. housing in the capital increasing by 21.3%.

During the same period, it was also reported that approximately 614,635 home sales took place statewide, representing the largest annual sales volume since December 2003.

Eliza Owen, head of research at CoreLogic and author of the report, said strong housing market activity has been supported by a combination of factors, such as low loan rates and relatively small amounts of inventory on hand.

“Government support related to housing, such as the First Home Loan Deposit and HomeBuilder programs and non-housing fiscal stimulus, such as JobKeeper, have helped many Australians cover housing costs such as rent and rent. mortgage payments, ”explained Ms. Owen.

Weighing in on the impact of this government aid for buyers, she added: “Along with postponements of mortgage repayments, these household support measures stabilized the housing supply until 2020 by preventing sales in difficulty, and these repayment postponements were reintroduced amid the blockages in 2021.”

On top of that, Ms Owen reported a growth in the household savings rate of 23.6% through June 2020, up from an average of 6.9% over the decade, despite onerous lockdowns and consumer spending. limited in the short term.

It is likely that the fall in mortgage rates and the observed recovery in the economy and the housing market from the end of 2020 have contributed to a sustained demand for housing, especially in cities affected by the closures in 2021 ” , Ms. Owen said.

She also added another layer to her observation: “However, the nature of the restrictions also affected housing dynamics, with sales volumes declining much more dramatically in areas where physical inspections of property were prohibited. “

His statement refers to data on rent prices, which also saw a significant increase nationwide, increasing 9.4% through November 2021, the highest annual growth rate since January 2008.

Highlights by state and territory

NSW

Since October 2020, the New South Wales housing market has been on the rise, with home values ​​statewide climbing 26.5% in the year through November 2021 This was reported as the second highest growth among states and territories, just behind Tasmania, which saw a 28.6% increase over the period.

The high-end lifestyle markets with the highest annual growth rates are the Southern Highlands and Shoalhaven at 36.6 percent, Sydney’s North Beaches at 36.4 percent, the Central Coast at 34, 1 percent and the Baulkham Hills and Hawkesbury area at 33.2 percent.

Victoria

The largest disparity in housing market performance was observed between regional and urban locations in Victoria, according to the report. Greater Melbourne had the second weakest result among the capitals, where house prices soared 16.3% in the year through November, while regional Victorian property values ​​rose 24 %.

The city’s migration levels, economic production and housing demand are all believed to have been influenced by limitations on Australia’s foreign migration, as well as Melbourne’s extended closures in 2020 and 2021.

Queensland

The mixed results from the Queensland real estate market have helped the industry experience phenomenal growth over the past year. Brisbane’s quarterly growth continues to increase, while the southeastern state has seen the fastest growth rate in its lifestyle markets.

Ms Owen attributed this trend to a combination of reasons such as “historically low listings and a median home value of $ 757,194, which is -23.3% less than the median Melbourne home value and -44. , 3% less than the median of the Sydney house ”.

Queensland also recorded Australia’s highest net interstate migration in the year ending March 2021, with interstate migration up 28.2%.

South australia

Adelaide ranked second in terms of quarterly price growth among capital cities and recorded the highest quarterly growth rate in the past 20 years, growing 6.5% in November.

Ms. Owen pointed out that the consistently constrained housing supply and relative affordability were possible factors behind the consistently high quarterly growth in Adelaide’s housing market. Adelaide is the third most affordable city, behind PerthPerth, TAS Perth, WA and Darwin, with a median housing value of $ 558,179.

Western Australia

Home prices in Western Australia have been trending upward since November 2019 and are now 22.1% higher than when they hit their lowest point in October 2019. However, Ms Owen pointed out that it is “still -3.4% lower than the June record. 2014″.

The rebound in home values ​​in Western Australia was stronger in Perth, where prices are -2.4% lower than the peak in June 2014, but values ​​in the Western Australia region are still lower from -20.7% to the peak of January 2008. Real estate prices have increased due to successive drops in cash rates, more favorable internal migration trends and an increase in employment, particularly in the mining industry.

Tasmania

Tasmania was reported as outstanding as its real estate market consistently outperformed other states and territories through November. House prices climbed about 30 percent the year before, bringing the state’s five-year annualized growth rate to 11.8 percent.

Over the past five years, the median home price in Hobart has fallen from the lowest of any capital city at just $ 359,088 to the fourth highest at $ 676,595.

Fueled by a strong economic and demographic position prior to the pandemic, median rent prices fell from $ 345 per week to $ 495 per week over the same period.

North territory

The Northern Territory saw a 15.6% increase in house prices in the year through November, which the CoreLogic report attributed to “low interest rates, incentives to buy a first home, government assistance programs via COVID-19 and improving economic conditions ”.

However, the latest results from Darwin’s Home Value Index show that his home prices are still -15.3% lower than their May 2014 high, despite a 25.9% increase from the low of. March 2020.

ACT

The housing market in ACT grew steadily in 2021, with the median home value in the nation’s capital falling from $ 245 to $ 1 million in November after rising 27.2% the year before. In October 2021, ACT topped Melbourne’s median house value, placing it just behind Sydney.

Conditions are favorable for homebuyers in the territory as, despite continued development, housing affordability in Canberra has remained relatively stable, thanks to above-average incomes and low unemployment rates.

Look ahead

Aligned with the real estate market forecast, Owen acknowledged slowing growth rates, an indicator that the strong growth seen in 2021 may not be repeated in 2022 due to differences in dynamics between states and territories.

The pace of the housing market in Sydney and Melbourne is slowing, due to a large number of listings currently on the market and significant accessibility limitations, the CoreLogic research manager said.

“Across Melbourne, demand appears to be shifting to more affordable areas of the city, with lower-value housing markets experiencing accelerating quarterly growth rates. Likewise, value gains are accelerating in the New South Wales region, while affordability weighs on housing demand in Sydney, ”observed Ms. Owen.

In addition, value growth rates in Brisbane and Adelaide have reached their record highs in more than a decade and continue to climb. A similar trend has been reported in ACT, with a median home price approaching $ 1 million, fueling investor participation in the area while pushing buyers to seek out units instead.

Based on this trend, Ms. Owen raised the red flag.

“Enrollment levels are normalizing in Sydney and Melbourne, and affordability constraints are worsening in most housing markets,” she said.

She stressed that the sharp rise in value and above-average property turnover rates seen in 2021 are not sustainable, especially given expected headwinds such as recent changes in mortgage rules and mortgage lending. signs of rising interest rates, both of which are expected to reduce housing demand.

“As a result, 2022 is expected to see much more moderate appreciation rates in Australian home values,” Ms. Owen concluded.

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Property

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Housing is key to economic recovery from COVID-19



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Last updated: December 13, 2021

Posted: December 14, 2021