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The status of the Australian Property Market

A year after the Covid pandemic – 2021 saw significant growth in residential values across Australia that were mainly driven by scarcity, coupled with a high demand from buyers engaging in an extremely low interest rate environment. While analysing the Australian property market can often be inconsistent from city-to-city, the market this year has seen all cities performing in sync with double-digit residential annual growth. In this article we look at some observations in the Australian property market this year.

Buying Activity

A study at the end of June 2021 showed that every Australian capital city recorded an upward trajectory in annual sales volume. The number of days a property was listed on the market fell 24% over the past year. This is equivalent to having almost a month (29 days) shaved off the average Australian property listing.

One of the core reasons for the higher sales volume is due to the persistently low Australian interest rates, enticing more people to enter the property market. The Reserve Bank of Australia has not increased official rates in a decade and on Friday signalled it was unlikely to do so until 2024. The expectation that mortgage rates will remain low for a longer period of time means that getting a mortgage will be cheaper, supporting the growth in housing values.

Whilst overall borrowing remains high, there remains a discrepancy between the type of borrowers in the market. Lending data shows the slowdown in first time home buyer activity, where the number of owner-occupier first home buyer loans fell 23% between January and August. The same period saw a 43% increase in the number of first-time home buyers taking out an investment housing loan – providing them a “rent vest” to start their property journey.

Rising Prices

In turn, this period of high activity has led to exceptionally high rates of price appreciation. To put things in perspective, a Guardian post revealed Sydney’s residential property prices to have gone up 19% in the past year and up 15% in Melbourne. This is the fastest pace of growth since 1989. The median dwelling price in Sydney is now $1.19m. To put things another way, a Guardian article mentioned that “the latest figures from the bureau of statistics show that if you were living in Sydney and had got pregnant last September, by the time you gave birth the median price of a house in Sydney had risen by almost $240,000”.

With that being said, while Australian property prices are still increasing at double-digit annual rates of growth, there are early signs that the rate of growth is returning to more normal levels, there are early signs that the rate of growth is returning to more normal levels. This is in part due to more Australian properties being made available in the market.

However, while the rate of growth has slowed slightly of late, there remains an imbalance between supply and demand that is likely to push prices consistently higher.

Moving forward, it has become increasingly clear that the growth of the Australian housing market has peaked in the first quarter of the year, when national dwelling values increased by 2.8%. Since then, the monthly rise in values has eased back to 1.5%.

There is a discrepancy between the rate of growth between property types. On one hand, apartment values have risen slower than house values despite worsening affordability. This has been seen throughout the Covid-19 pandemic, especially across the capital cities. This is not as obvious in the rural areas away from the capital cities. In fact, in regional Australia, apartment values were rising a lot faster than house values – reflecting a solid demand for downsizing options and purchasing holiday homes in the more popular coastal areas.

Limited Supply

The upwards pressure on Australian housing values can be factored by persistently low advertised supply. On one hand, there is a trend in new listings being added to the market. Based on a four-week count in September, new listings have increased 28%, bringing the trend in new listings up 3% from the 5-year average for the month. However, it is worth knowing that while property listings are increasing, the trend in listings that are active remain very low, spurring the rapid rate of absorption seen amidst high buyer demand. The total advertised housing supply levels are 28.1% lower than the five-year average, with all the capital cities recording low levels of advertised supply.

Growing Rents

Focusing on the Australian rental market, there are early signs of slowing rates of rental growth with rates slowing over the second quarter increasing by 2.1% compared to 3.2 in the first quarter. Taking the year as a whole, Australia has experienced the largest average increase in rental prices in over a decade, recording an 11.3% YoY rate of growth in June 2021. While limited supply has resulted in the rising prices of rent, some other causes of the growing rental prices are the accumulation of household savings through the multiple lockdowns, higher government stimulus due to COVID-19, and the swift economic recovery seen as restrictions eased.

We understand that the rising property values can seem extremely overwhelming and may deter some from buying a property, however with careful consideration and good guidance, Australian property has and always will be a popular choice among investors - be it for capital growth or rental income. The market has delivered results consistently over time, making a property portfolio in Australia one of the most secure bets out there. Buy-to-let properties will always be an investment strategy that makes sense, especially in Australia, whether it is a property in a growing capital city or an area with a high number of international students. In fact, supporting this, Mr Lloyd Edge, Director of Aus Property Professionals, mentions in an article on, that despite huge increases, now is a good time to buy property.

The Tailor My Property team has helped many clients with overseas properties including Australia over the years, and over the trying times of the recent pandemic. We hope that this article has usefully summarised the status of the property market down under. There will be more posts coming up that will share more in-depth information of the capital cities, so keep a look out for those by following us on LinkedIn, Instagram, and Facebook. As always, reach out to have a conversation with us anytime.


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