Driven by record low interest rates and a large number of government stimulus measures to purchase housing, Australian real estate prices have soared at the end of 2020. New data shows that this trend continues until 2021.
REA economist Anne Flaherty said that in the first half of this year, prices in the real estate market grew very strongly.
Flaherty said: “2020 is one of the most unusual years we have ever seen. In that year, the Bank of Australia cut interest rates sharply and (due to the closure of the international border) people’s savings as a percentage of income was more than twice that before the epidemic.“
“Last year (during the lockdown), we saw market activity paused, but this year we saw people returning to the market in droves, and high levels of demand pushed up house prices across Australia.” The latest analysis by REA depicts the performance of the real estate market so far in 2021, according to data, is better than expected.
An analysis of the urban areas with the largest increase in average valuations of apartments and houses in the capital city area shows that areas far from the CBD and with beautiful scenery have the largest increase in the first half of 2021.
Only in December 2020 and June 2021 will there be at least 30 or more high-confidence housing valuations in urban areas that will be included in the data considerations.
Compared with standard valuation, high-confidence valuation is supported by more data, including the historical transaction price of the property itself, the selling price of similar properties in the area, and local housing price trends.
Flaherty said: “As more and more people work from home; the inner city is not as attractive as it used to be.”
“There is huge demand in remote areas and scenic areas, but there are not as many properties for sale as buyers.
“In a sense, people realize that if they want to get a chance to compete, they must make a truly competitive offer. Therefore, buyers only increase their offer to be more competitive, which also pushes up price.”
The surge in demand for properties in scenic areas
Almost all suburbs with the fastest growth in average property value within each capital city fall belongs to this category.
For example, Phegans Bay in Sydney’s Central Coast experienced a 43% increase in house prices; Melbourne’s Mornington Peninsula’s Shoreham increased by 44%; Brisbane’s Moreton Bay area Laceys Creek also experienced a 33% increase in valuation.
Flaherty said that not only are the residential conditions in these urban areas very attractive, but their commuting is also a major factor in attracting buyers.
“These places are only an hour and a half away from the city, and the transportation infrastructure is also very good. Most of them are in coastal areas or places with beautiful scenery. Therefore, they attract those who seek this way of life and want to be close to convenient facilities people,” she explained.
The average price of a single house in Hunting Field, Tasmania has the largest increase in the Greater Hobart area, with a 77% increase in June 2021 compared to six months ago.
Joe Brownlee, a real estate network for autumn real estate in the area, said that this number is not surprising.
“Now people are being pushed more and more to the cities. The demand for properties in these places has exceeded our existing saleable properties,” she added.
“Inner city housing prices make it very difficult to buy a house in New York, so people are starting to cast important votes to farther places.”
Those urban areas where the average unit value has increased the most have followed a similar trend of “pursuing quality of life”.
For example, Tamarama in Sydney’s eastern suburbs recorded a 58% increase in house prices; Melbourne’s Mornington Peninsula’s Rye’s increased by 58%; and Brisbane’s Scenic Rim’s Beaudesert’s unit valuation also increased by 24%.
Owner-occupiers look for large units, investors turn to inner-city apartments
Another analysis of the most demanding urban areas in each capital city shows that urban areas far away from the CBD are also favored by home buyers who plan to buy their own homes in 2021.
Brighton in Melbourne is known for its waterfront luxury homes and celebrity residences. It is the city’s most popular suburb for home buyers. In the first half of 2021, there were 275,746 active home buyers looking for houses in the area.
Camp Hill, which is dominated by family residents, is the most popular suburb in Brisbane (195,646 buyers); in Sydney, Kellyville has the most potential buyers (248,626).
Flaherty said data shows that home buyers during COVID-19 are more likely to be attracted to houses with more space because they spend more time at home during the epidemic.
“Due to the very high land value, houses in the CBD and its surrounding markets tend to be small. As people work from home and spend more time at home, they are starting to look for larger houses with more bedrooms,” she explained.
But the inner city still attracts some buyers. The most popular suburbs for unit buyers are all located in the city centre.
The CBDs of Sydney (278,703 buyers), Melbourne (602,140 buyers) and Brisbane (254,333 buyers) are the top choices for apartment buyers in their respective cities.
Flaherty said that due to the oversupply of apartments in the CBD, investors may be taking advantage of the opportunity of falling house prices.
“We have seen a decline in the inner-city market, which means that prices are lower than the original level,” she said.
“Currently, the vacancy rate of many CBDs is still high, especially Melbourne and Sydney. However, from an investor’s point of view, international students will eventually return, and overseas immigrants will recover. People who come to Australia often prefer to live in the city central area.”
Demand for properties in the Central District with convenient transportation are rising
Although many of the urban areas most in demand by buyers have strong aesthetic features, such as beautiful homes, tree-lined streets, and beautiful water views, the urban areas with the fastest-growing demand from buyers do not.
The demand for Essendon West in the northwest of Melbourne increased by 132% in the first half of 2021 over the previous six months.
Flaherty said: “This type of central area is very attractive to buyers because you have a double advantage.”
“There is space around you, there are bigger houses, and these urban areas are still connected to the public transportation network, and there are also very good amenities nearby.”
“If you think about where the family wants to live, you will find that they don’t want to live in the wilderness. They will want to go to schools, shopping malls and the like.”
Real estate is selling at an alarming rate
Flaherty said that the lack of supply, coupled with strong buyer demand in most parts of Australia, not only pushed up house prices, but also shortened the stay of properties for sale in the market.
According to REA data, in some urban areas, houses were bought only a few days after they went public.
In the first half of 2021, Melbourne Skye’s median time for sale of houses was 9 days, making it the city’s shortest time for sale.
It takes an average of 10 days to sell properties in Eagle Vale in Sydney and 13 days in Edens Landing in Brisbane.
Flaherty said these districts are also located outside the city. Under the COVID-19 epidemic, buyers can find larger houses and larger spaces here, which means that the supply must be one reason why houses in these urban areas are selling at an alarming rate.
Flaherty explained: “The demand for properties in these suburbs is growing, but they are not as often listed for sale as the properties in the city centre, which is why you see the number of days on sale in these areas drop.”
“Once properties in these suburbs are listed for sale, buyers move very quickly.” This is the case in most parts of Hobart. According to analysis, the median number of days on sale in the five suburbs with the fastest property sales is two weeks inside.
These five districts include Claremont (11 days), New Town (11 days), Howrah (11 days), Lindisfarne (12 days) and Lenah Valley (13 days).
Flaherty said: “We found that Hobart properties are selling faster than anywhere else in Australia.”
Brownless said that most of her homes were sold “in less than a week.” She said: “We advertised (for a set of properties) in the middle of the week and had two open tours. By Sunday night, the transaction was basically completed.” “Either fast or get nothing at all. This is real.
“We have indeed seen some inquiries from international buyers. They really want to buy our property and hope to move to Hobart one day.”
In the unit market, properties for sale in Dee Why Sydney have the shortest stay in the market at 14 days. Langwarrin in Melbourne is 15 days, and Carina in Brisbane is 26 days.
City lockdown measures may boost spring sales
The Australian real estate market has been affected by the new crown epidemic for the second year in a row. Several states, including Australia’s two largest real estate markets, Melbourne and Sydney, are currently under long-term lockdown.
Flaherty said this restricts market activity because buyers cannot easily view properties and auctions have been moved online. Many sellers may have been affected.
She also pointed out that although from a seasonal perspective, winter is a period of slower sales, many sellers may postpone the sale of properties until the epidemic restrictions are lifted.
“In the coming weeks, we will see that the real estate market will be very calm, because nearly half of Australia is under lockdown,” she said. “For many sellers, this is not an attractive time to bring their property to market.
“We may see that people who would have put their properties on the market for sale will delay for a while. Doing so may increase the number of properties for sale in the spring.
“When spring comes, the number of properties for sale usually increases. But due to the lockdown this winter, this may lead to a particularly prosperous spring sales period.”
Flaherty said that buyers will still be able to purchase properties, but their options will be limited, and the number of properties for sale will be much lower than before the lockdown.
Although prices are expected to continue to rise, the rate of increase will slow due to the blockade.
She predicts that after the lockdown is over, sales activity, the number of properties listed for sale and prices may rebound strongly, just like the situation in Melbourne nearly four months after the second lockdown last year.