$2.2 trillion later: How Australian property performed in 2021

In a new report reflecting on the property movements during the 2021 year for Australian property, CoreLogic has recorded the country’s top sales, highest median values and strongest growth rates.

CoreLogic head of research Eliza Owen noted the estimated value of Australia’s residential real estate had surged from $7.2 trillion at the end of November 2020, to a record high of $9.4 trillion 12 months later.

Detached house prices rose by 24.6 per cent in the year, outperforming the 14.2 per cent lift for unit prices.

Similarly, the 25.2 per cent increase in regional dwelling values surpassed the performance of the combined capital cities, which was 21.3 per cent, reflecting the extended lockdowns and remote working trends.

Further, sales volumes climbed to an estimated 614,635 in the past year, the highest level in almost 18 years, while dwelling values nationally increased by 22.2 per cent in the 12 months to November, the highest rise since 1989.

National best performers for 2021

Houses

Suburb with highest median value – $8.7 million, Bellevue Hill, Sydney’s eastern suburbs

Lowest median value - $90,155, Kambalda East, WA outback (south)

Highest 12-month change in value – St Andrews Beach, Mornington Peninsula, Victoria

Highest 12-month change in rents – Bicheno, South-east Tasmania

Highest rental yields – 14.7 per cent, Kambalda West, WA outback (south)

Units

Suburb with highest median value - $3.2 million, Point Piper, Sydney’s eastern suburbs

Lowest median value - $158,846, Woree, Cairns, Queensland

Highest 12-month change in value – 56.6 per cent, Yamba, Coffs Harbour, Grafton, NSW

Highest 12-month change in rents – 33.7 per cent, Narooma, NSW

Highest rental yields – 10.7 per cent, Woree, Cairns, Queensland

“Strong housing market performance over the year was driven by multiple factors, including low interest rates, fiscal and institutional support for households, high household savings and relatively low levels of advertised stock,” Ms Owen said.

“Rates of housing turnover had also been relatively low for some years before these factors boosted housing demand, which may also explain the elevated volume of sales in the past 12 months, which at November was 32.6 per cent above the decade annual average.”

She also noted COVID had shaped demand trends, with coastal or leafy settings being more desirable, as workers were able to work remotely.

“However, this phenomenon may also just reflect market dynamics that have been observed in the housing market cycle over about a decade, where more expensive markets (particularly in Sydney and Melbourne) tend to show more volatility,” Ms Owen said.

“This means during the upswing phase of the housing market cycle, expensive property markets in these cities will generally see higher growth rates.”

St Andrews Beach on the Mornington Peninsula recorded a value growth rate of 58.6 per cent, the highest for houses in the country. Meanwhile Mosman, one of Sydney’s most affluent suburbs, recorded 325 transactions worth almost $1.8 billion for the year.

However, units dominated the top 10 list of Australia’s most expensive property sales, including three in excess of $40 million each in the newly completed Barangaroo tower on Sydney’s harbourfront.

The top 10 sales for the year totalled $407 million and ranged from $31.25 million to $60 million.

However, CoreLogic has tipped the market have hit its peak for price growth, as worsening affordability constraints, a rise in supply and a recent tightening for loans take effect.

While providing an outlook for the 2022 market, Ms Owen noted the likelihood that sales and listings activity had also likely peaked.

“The constraints of slightly tighter credit conditions, the erosion of housing affordability and a higher level of listings being added to the market are expected to see softer growth rates across property values in 2022,” she said.

“These forces are an accumulation of headwinds for property market performance. Softer growth rates are likely to coincide with fewer purchases, where sales and listings activity eventually move with momentum in price.”

[Related: Auctions skyrocket to reach new record: CoreLogic]