A look back on the year that was in the Australian property market
As 2021 draws to a close, we look back on the year that was in the Australian property market.
The strong demand we saw for properties Australia wide in Q3 & Q4 2020 carried over to the start of 2021 and morphed into a once in a generation property boom, the likes of which we have never seen before.
Between Q2 and Q3 property markets across the country were breaking records almost on a weekly basis. There were street records, suburb records, regional records, lifestyle property records and rural records with no end in sight.
What are the main market drivers: 1. Record low interest rates. 2. Lack of Supply. 3. Demand for housing hit record highs. 4. Increased wealth throughout the pandemic. 5. Demand for lifestyle properties soared.
The estimated value of Australia’s residential real estate has gone from $7.2 trillion at the end of November 2020, to reach a record high of $9.4 trillion in just 12 months.
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.
Sydney has experienced exceptionally strong growth, with growth in house prices of 30.4% and growth in Unit prices of 15.2% to the end of November 2021. Some suburbs recorded 50%+ growth in the median house price during this period. Also, over the past 12 months, the number of suburbs with a median price of $1million doubled as 392 new suburbs nationally joined the million-dollar club. This also meant that Australia’s $3 million suburb club doubled again in 2021.
Another record broken in 2021 was the speed at which many properties were sold. With multiple buyers keen to purchase the limited number of good properties for sale, many were forced to make quick decisions and, in some cases, pay a premium to purchase their property. In November, the median number of days a property was listed on realestate.com.au before it was sold was 30 days, a historic low.
Auction campaigns were shortened to 2 to 3 weeks rather than the traditional 4 to 6-week selling campaign, with record auction clearance rates meaning most properties sold considerably above their reserve price.
The high-end outperformed the rest of the market with demand for luxury housing soaring over the last 12 months. Properties on or near the harbour, properties along the coast and near the beach enjoyed exceptional growth over the last 12 months. The top 20 property Sydney sales alone totalled a record high of almost $700 million, with more than 45 sales in the rarefied $20 million-plus range – more than double the previous top performance in 2018.
Whilst the market is still performing well, the FOMO and crazy buying we saw in Q3 has dissipated and it is likely Australia’s property market has seen the peak of value increases for the time being.
Over Q4 we have seen an increase in stock levels over the last few months especially at the lower to middle level of the market. New listings lifting 8% month-on-month in Sydney bringing new listings to their highest level since 2015. Sydney’s clearance rates have come down as supply finally starts to catch up with demand.
in addition, tighter borrowing requirements have had a real impact on borrowing capacity with buyers having budgets pulled back as they go to renew their loan approvals.
2021 was well and truly a ‘sellers’ market, but as the year comes to an end, even though buyers continue to outweigh sellers, there are signs that the pendulum may slowly be swinging back.
Demand is expected to ease from its strong levels; fewer disruptions due to lockdowns should lead to a consistent supply of new listings, and price growth is expected to slow. Overall, we appear to be witnessing the first signs of a shift from an extreme sellers’ market to one which is slowly moving towards more balanced conditions between buyers and sellers.
What are we expecting for 2022?
We expect Sydney property prices to continue to grow in the first half of 2022 but at a much slower pace than we saw in 2021. Growth of 10%-15% is certainly achievable in 2022 as 1000’s of expats return home, and our boarders reopen to foreigners. Australia wide we expect modest increases of around 5%-8%. We also expect demand for lifestyle properties will fall as more and more Australians get back to travelling overseas.
2021 was a crazy year but we have made it to the finish line.
Founder & Principal
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