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2021: Off to a flying start with record house prices

2021: Jumping into the record booksIf 2020 taught us anything, it’s that things can change. And quickly we might add.

Not too long ago, many highly-regarded economists predicted property prices could plummet 30% due to COVID-19.

Instead, now we’re seeing official RBA documents predict that house prices could increase as much as 30% over the next three years, providing the official cash rate remains near record low levels (at or below 0.5%).

Suffice to say, market sentiment is soaring with 2021 already re-writing the record books. Let’s take a closer look at to the records being broken.


1. Record high house prices

Australian housing values have just reached a new record high as prices continue to rise across the country, according to CoreLogic.

In fact, housing values have surpassed pre-COVID levels by 1.0%, and the index is 0.7% higher than the previous October 2017 peak.

Every capital city/ region recorded a rise in housing values in January, ranging from 0.4% rise in Sydney and Melbourne to  2.3% increase in Darwin. Canberra recorded an increase of 1.2%.

Something we find interesting is that regional housing values seem to be rising at more than twice the growth we’re seeing in capital cities.

“Better housing affordability, an opportunity for a lifestyle upgrade and lower density housing options are factors that might be contributing to this trend, along with the new found popularity of remote working arrangements,” says CoreLogic’s research director, Tim Lawless.


2. Record low interest rates

In case you missed it, the RBA cut the official cash rate three times in 2020, with the last reduction in November taking the rate to just 0.1%.

In addition, competition amongst lenders is fierce, and many are offering record-low home loan rates in a bid to attract as many new borrowers as possible.


3. Record numbers of building approvals

Private house building approvals rose for the sixth consecutive month in December also reaching a record high, according to Australian Bureau of Statistics (ABS) data.

In fact, private house building approvals surged 55.6% over the year.

“Federal and state housing stimulus measures (such as HomeBuilder), along with record low-interest rates have contributed to strong demand for detached dwellings,” says Daniel Rossi, Director of Construction Statistics at the ABS.


4. Record numbers of borrowers refinancing

With record-low interest rates, it makes sense that we’re also seeing a record number of home owners refinance their loans to save thousands of dollars.

ABS data reveals that last year, the total number of borrowers who switched providers increased by 27% – from 143,664 in 2019 to 182,016 in 2020.

A recent Finder study predicts the refinancing trend will continue this year, with nearly 200,000 Aussies expected to switch lenders in 2021.


5. Record-high market positivity

With all of the above in mind, it’s no wonder that buyer confidence is surging.

Positive sentiment among those in the property market has reached a record high, and negative sentiment is at an all-time low, according to a recently published bank commission survey on consumer attitudes towards the property market.

The positive sentiment is supported by expectations of property price increases, higher levels of market activity and a combination of record-low interest rates and government stimulus incentives.

You may not be feeling this same positivity if you’re trying to buy a property now though(!), with properties effectively selling themselves for often much higher than than anticipated.


What’s in store for the rest of 2021 is anyone’s guess, although we suspect it will be more of the above for a bit longer.

Whether you’re looking to buy or refinance to save a few dollars, we can assist you with your property plans for the year.

Give us a call on 02 6286 6501 or get started here.

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