Why house price growth will slow in 2021 following double-digit surges


Australian home price growth is set to slow down in late 2021 following double-digit surges since the worst of the Covid downturn.

National property values climbed by 1.8 per cent in April, a sharp comedown from March’s 2.8 per cent pace which was the fastest since October 1988.

Since the Covid downturn ended in September last year, following five straight months of decline, house and apartment prices have soared by 10.2 per cent.

Last month, property prices hit record highs in 63 of Australia’s 88 real estate sub markets with prices falling in just four localised regions nationally, CoreLogic data showed.

CoreLogic’s research director Tim Lawless said property price growth was likely to slow in coming months as affordability worsened.

Australian home price growth is set to slow down in late 2021 following double-digit surges since the worst of the Covid downturn. A young couple wanting to buy a Sydney house, with a median price of $1.147million would need to save up $229,470 to fund a 20 per cent mortgage deposit. Pictured is a house at Auburn in the city's west with a price guide of $1.145million to $1.195million

Australian home price growth is set to slow down in late 2021 following double-digit surges since the worst of the Covid downturn. A young couple wanting to buy a Sydney house, with a median price of $1.147million would need to save up $229,470 to fund a 20 per cent mortgage deposit. Pictured is a house at Auburn in the city’s west with a price guide of $1.145million to $1.195million

Proof the young are missing out on a house

SYDNEY: Up 2.8 per cent to $1,147,352

MELBOURNE: Up 1.4 per cent to $869,676

BRISBANE: Up 1.8 per cent to $621,806

ADELAIDE: Up 2.2 per cent to $526,155

PERTH: Up 0.9 per cent to $537,020

HOBART: Up 1.1 per cent to $600,774

DARWIN: Up 2.7 per cent to $534,332

CANBERRA: Up 2.1 per cent to $833,080

Source: CoreLogic Home Value Index for April 2021 covering median house prices 

‘The slowdown in housing value appreciation is unsurprising given the rapid rate of growth seen over the past six months, especially in the context of subdued wages growth,’ he said.

‘With housing prices rising faster than incomes, it’s likely price sensitive sectors of the market, such as first-home buyers and lower-income households, are finding it harder to save for a deposit and transactional costs.’

A young couple wanting to buy a Sydney house, with a median price of $1.147million would need to save up $229,470 to fund a 20 per cent mortgage deposit. 

Sydney’s mid-point house last month increased by 2.8 per cent – double the 1.4 per cent annual increase in Australian wages.

Weekend auction clearance rates in Australia’s most populated city stood at 83.5 per cent. 

Even the national property price of $624,997, covering both capital cities and regional areas, would be a stretch for someone earning an average, full-time salary of $89,000.

The Australian Prudential Regulation Authority, the banking regulator, is a concerned if a borrower is paying off more than six times their salary after a mortgage deposit is factored in. 

That means borrowers can only really afford to service a mortgage if they are in a dual-income relationship.

In Melbourne, median house prices climbed by 1.4 per cent to $869,676. 

In Melbourne, median house prices climbed by 1.4 per cent to $869,676. Pictured is a house at Altona in the city's west with a price guide of $870,000 to $950,000

In Melbourne, median house prices climbed by 1.4 per cent to $869,676. Pictured is a house at Altona in the city’s west with a price guide of $870,000 to $950,000

Brisbane’s equivalent value rose by 1.8 per cent to $621,806 as Adelaide’s median house price grew 2.2 per cent to $526,155.

Perth’s mid-point house price rose 0.9 per cent to $537,020 as Hobart’s median detached home value increased by 1.1 per cent to $600,774.

In the territories, Darwin’s median house price increased 2.7 per cent to $534,332 as Canberra’s mid-point climbed 2.1 per cent to $833,080. 

Westpac is expecting Sydney property price to surge by 16 per cent in 2021 before slowing to 5 per cent in 2022 and falling by 1 per cent in 2023.

CoreLogic's research director Tim Lawless said property price growth was likely to slow in coming months as affordability worsened. Pictured is an auction at Paddington in Sydney's inner east in February

CoreLogic’s research director Tim Lawless said property price growth was likely to slow in coming months as affordability worsened. Pictured is an auction at Paddington in Sydney’s inner east in February 

With the Australian economy recovering strongly from the Covid downturn, the bank’s statutory net profit for the first half of fiscal 2021 tripled, rising by 213 per cent to $3.443billion when compared with the first half of fiscal 2020.

The comparison periods covered September 2020 to March 2021 and September 2019 to March 2020.

First-home buyers made up 13 per cent of Westpac’s new home borrowers in the six months to the end of March 2021.

Westpac chief executive Peter King said the bank was keeping an eye on borrowing struggling to repay loans, even though this wasn’t an issue yet.

‘While the economic outlook is more positive, there is still some uncertainty and we have remained prudent in our impairment provisioning,’ he said.

Brisbane's equivalent value rose by 1.8 per cent to $621,806. Pictured is house at Chermside West in the city's north on the market for more than $600,000

Brisbane’s equivalent value rose by 1.8 per cent to $621,806. Pictured is house at Chermside West in the city’s north on the market for more than $600,000



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