Housing integral to Australia’s COVID-19 economic recovery

The property market’s fastest upswing on record, accompanied by a rapid increase in housing credit and highly elevated sales volumes has significantly supported Australia’s post-pandemic economic recovery.

CoreLogic’s latest Economic & Property Review explores the major housing market trends to the end of November 2021, providing a national overview of the $9.4 trillion sector’s performance within the current economic landscape.

A summary of the housing finance environment, and a review of housing and economic performance in each state and territory is also included.

National dwelling values rose 22.2%, comprised of a 25.2% lift across regional Australia and a 21.3% rise in combined capital city dwelling values in the 12 months to November 2021. In the same period, there were an estimated 614,635 dwelling sales across the country, which is the highest annual sales volume since December 2003.

Report author, CoreLogic’s Head of Research Eliza Owen, said strong housing market activity has been supported by a combination of factors, including low interest rates and relatively subdued levels of available stock.

“Housing-related government support such as the First Home Loan Deposit and HomeBuilder schemes and non-housing fiscal stimulus, such as JobKeeper, helped many Australians service housing costs such as rents and mortgage repayments,” she said.

“Alongside home loan repayment deferrals, these household support measures stabilised the supply-side of housing through 2020 by preventing distressed sales, and these repayment deferrals were re-introduced amid lockdowns in 2021.”

Australia’s household savings rate also increased to 23.6% through to June 2020 against a then decade average of 6.9% on the back of strict pandemic lockdowns and inhibited short-term consumption spending.

“It is probable that lower mortgage rates, and an observed economic and housing market recovery from the end of 2020, contributed to buoyant housing demand, particularly in those cities impacted by lockdowns in 2021,” Ms Owen said.

“However, the nature of restrictions also affected housing dynamics, with sales volumes falling far more dramatically in areas where physical inspections of property were prohibited.”

Ms Owen warned the high value growth and above-average rates of housing turnover recorded in 2021 are unsustainable, particularly with forecast headwinds such as recent changes to mortgage lending conditions and signs of interest rate increases, both of which are likely to slow housing demand.

“Listings levels are normalising across Sydney and Melbourne, and affordability constraints are worsening across most housing markets,” she said.

“As a result, it is expected that 2022 will see far milder rates of appreciation in Australian dwelling values.”

Commentary by Eliza Owen on the key findings by State and Territory

Queensland

The Queensland housing market has seen highly diverse property performance outcomes. Lifestyle markets in the state’s South East have shown the highest rate of growth in the past year, while Brisbane (and Adelaide) has a rolling quarterly growth rate that continues to trend higher.

This can be attributed to several factors including historically low listings and a median house value of $757,194, which is -23.3% less than Melbourne’s median house value and -44.3% less than Sydney’s median house value. Queensland also recorded Australia’s highest net interstate migration figure in the year to March 2021, with interstate migration increasing 28.2% over the year.

Report by -CoreLogic’s Head of Research Eliza Owen