• Jade Benham

Australia's median house price smashes $1 million

By James Robinson originally posted on Domain


Australia's blisteringly hot property market ended 2021 far stronger than it started, with new data showing median house values across all capital cities exceeded $1 million for the first time in history.

Domain's latest House Price Report shows capital city buyers across the nation forked out an average of $1,066,133 to buy a house over the past year.


This represents an annual increase of 25.2 per cent and a quarterly rise of 6.5 per cent, with the latter figure demonstrating that the market bounced back in a big way at the end of the year following months of uncertainty and restrictions due to the coronavirus pandemic.

"It's been a big quarter, and what's been interesting about it is that we had three capital cities released from lockdown, so Sydney, Melbourne and Canberra really saw a rebound in activity," Dr Nicola Powell, Domain chief of research and economics, said.

"We saw record numbers of auctions being scheduled, there was an influx of new listings, but also buyers were out in force.

"We definitely have captured that rebound, and that's why we've seen such strong rates of growth over the quarter."


Among the eight capital cities, Sydney's unprecedented levels of growth equated to a 33.1 per cent year-on-year rise, with the median price for a house in Australia's most populous metropolis now sitting at $1,601,467.

The staggering seven-figure sum is punctuated by Sydney's median house price growing by nearly $400,000 compared to the December quarter of 2020.

This leap equated to the average Sydney house's value increasing by roughly $1100 per day.

While Sydney's record-breaking results are jaw-dropping, it wasn't the best performing capital city in the country.

That accolade went to Canberra, which saw its median house price swell by 36.6 per cent over the last 12 months.

The nation's capital now has a median house price of $1,178,364, making it the second-most expensive capital city to buy a home in the country.

Hobart witnessed the second-greatest level of housing price growth in 2021, with values skyrocketing by 34.4 per cent, which translates to a median price of $752,110 (up from $558,732 at the end of 2020).

Melbourne's property market had a strong resurgence for the final quarter of 2021, following a lengthy lockdown that hampered buyer and seller sentiment.

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The sporting capital of Australia recorded an annual rise of 18.6 per cent, and a 5.8 per cent increase for the December quarter, boosting the average house price to $1,101,612.

However, an explosion of new listings in the last few months of 2021 may cause things to slow down in Melbourne's market in 2022.

"Although Melbourne's severe and extended lockdowns came to an end, we have seen many businesses close and residents move away from the city," Dr Powell said.

"This means that the availability of homes for sale is building, with total supply now sitting at 10 per cent above the five-year average, and the value of new home loans has eased from its peak.

"Sellers should move into 2022 with some confidence that the pace of price growth will ease, and they will need to have a more realistic view of pricing because buyers now have more choices."




Darwin and Perth were the only capital cities that didn't register a record-breaking year of house price growth, with Darwin increasing by 30.1 per cent and Perth gaining by just 7.5 per cent.

According to Dr Powell, though, Australia's western-most city may be close to reaching its zenith for median house prices.

"Perth is so close to a new record house price that it's likely to achieve that in the next quarter," she said.

In a sign of life post-pandemic, house values also increased three times faster than units over the past year.


Despite the value growth delta between the two different types of dwellings, unit prices across all capital cities also reached a new record high, with the average unit now costing $621,880 (up by 7.7 per cent year-on-year).

And 2022 could be a year that sees unit prices rise even further due to a combination of factors in the market.

"Units have been out of favour compared to houses since the pandemic began, but with house affordability deteriorating so much relative to units, it's inevitable that some buyers will be forced back into the unit market," AMP Capital chief economist Dr Shane Oliver said.

"Particularly as the pandemic starts to lose some of its grip, we may start to see more interest in the unit market.

"But the biggest driver for it will simply be people being priced out of houses and being forced to look at units."

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Dr Powell agreed with Dr Oliver's sentiments, saying that the housing market's lack of affordability may trap people looking to make a change from apartment or unit living.

"The record price gap between houses and units not only makes it challenging for entry level buyers, but it also makes it harder for upgraders looking at going from a unit to a house," she said.

"What this might do is continue to contain some buyers to only be able to afford a unit.

"So that's the realism of the backdrop of the last year, this huge escalation of house prices, which just makes it grossly unaffordable for some buyers."


Read more of this article from the original post on Domain.

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