Sellers’ market as Australian property prices rise and buyers line up

It was once seen as the affordable alternative to Sydney and Melbourne’s crazy property market. But that’s coming to an end.

Supply is down and demand is up in Australia’s housing market, with properties selling for tens of thousands of dollars above the asking price as buyers battle it out to secure a property.

“It’s definitely a sellers’ market,” Real Estate Australia chief economist Nerida Conisbee told news.com.au.

Record-low interest rates as well as our changing savings habits on the back of the COVID-19 pandemic is driving the boom.

“We’ve had record savings rates during COVID which has given people a lot more money to put down as a deposit as well as record low interest rates and access to finance is easing up,” she explained.

Ms Conisbee added that competition between banks is continuing to drive the ultra-low interest rates while the economy starts to pick up with a recovering unemployment rate.

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There’s a housing boom in Australia despite the economic toll of the pandemic. Picture: iStock

Australians are recognising that real estate is a solid investment option with many buyers turning to outer-city beachside areas as our lifestyle and work arrangements changed during the pandemic.

Buyers are lining up in regional and coastal areas outside of the main capital cities, such as in northern NSW, Geelong, Woollongong and along the Sunshine Coast, while popular Byron Bay continues to thrive in the property market, up a whopping 40 per cent.

“Two areas that have seen the most growth in capital cities are the Mornington Peninsular and the Central Coast (NSW), which have grown by 10 per cent in the last 12 months,” Ms Conisbee said.

Regional areas recorded an average 1.6 per cent increase last month, up 7.9 per cent over the past 12 months, while the combined capitals rose 1.7 per cent over the past year, according to CoreLogic’s latest data.

The data shows house prices in Victoria’s Grampians, Noosa and the Noosa Hinterland in Queensland, the Yorke Peninsula in South Australia and Maranoa in southwest Queensland jumped at least 13 per cent last year. The Grampians in Victoria recorded the biggest leap in house prices, rising 16.6 per cent in the past 12 months.

Capital city prices are still down on pre-COVID levels, but only by about 0.2 per cent, while regional home prices jumped 6.5 per cent.

Ms Conisbee added that the smaller capital cities like Adelaide, as well as Canberra and Perth, are all doing well in comparison.

Adelaide’s housing market had often been considered an affordable option when compared to more expensive markets in Sydney or Melbourne in the eastern states.

By the end of 2020, Adelaide’s average house price reached a record high, peaking at $510,000, while some properties in the capital city are selling around $100,000 above the asking price.

“The median price has reached a new record high and the volume of sales has significantly increased across metropolitan Adelaide and the entire state,” the South Australian Real Estate Institute said in its December quarter report.

“It is a testament to South Australia’s reputation as one of the safest, most affordable and most liveable places in the world,” the report said.

RBA Governor Philip Lowe has also pointed out recently that housing prices are on the up despite the pandemic.

“There’s a lot of focus at the moment on the fact that housing prices are rising again,” Dr Lowe said. “The national house price index today is where it was four years ago. We’re back to where we were at the beginning of last year.”

CoreLogic’s latest figures show national average property prices are now 1 per cent higher than before the COVID-19 pandemic and 0.7 per cent above the previous September 2017 peak.

The Australian Bureau of Statistics highlighted how first home buyers have been a driving force behind the recent rally in prices.

The ABS data shows first homebuyer loan commitments jumped 9.3 per cent in December and 56.6 per cent over the past year.

“Federal and state government measures, such as HomeBuilder, and historically low interest rates are supporting ongoing growth in housing loan commitments.” ABS head of finance and wealth Amanda Seneviratne said.