What your house could be worth at the end of this record year for property


The last few months have been a strange time for the Australian property market.

When COVID-19 lockdowns began in early 2020, no economist quite understood what impact the pandemic would have on the economy. As recently as August 2020, ANZ were predicting a property price crash of up to 15% in Melbourne and 13% in Sydney by the end of 2021.

Instead, the first five months of 2021 produced the strongest continuous house price boom in recent memory.

2021 australian house prices record

To clearly understand the impact across the year, Finder adjusted CoreLogic's Home Property Value Index to start 2021 at a value of 100. As depicted in the chart below, Sydney has seen a 12 percentage point increase in property prices in the first five months of 2021 alone. Brisbane comes in second with a 9 percentage point rise, followed by Melbourne on 8 and Adelaide and Perth both experiencing a 7 point rise.

To find out where the index could go from here, we reached out to our panel of leading economists and property experts across Australia, as part of Finder's monthly RBA Cash Rate Survey. A list of participants can be found here.

On average, the expert panel predicted a further 8% price increase in Sydney and Perth in 2021, followed by a 7% rise in Melbourne and Brisbane, and 6% in Adelaide. In the chart below, I have applied these increases to the adjusted CoreLogic index.

The slopes of the predicted rises are, in every case, gentler than the slopes of the rises in the first 5 months of 2021. Our panel's predictions are, in other words, more conservative than the price increases we have already seen. The resultant figures, however, are astonishing.

This combination of the CoreLogic index and RBA Cash Rate Survey panel predictions forecasts a 21 percentage point price rise for houses in Sydney by the end of 2021. This is followed by 17 points in Brisbane, 15 in Melbourne and Perth, and 13 in Adelaide.

To put that into perspective, prices rose by just 4% in 2020 and 2019, and dropped by 8% in 2018. A 21% increase would be the highest annual increase for the Sydney property market in history - beating the previous record of a 15% rise in 2013.

The reality of what these price rises could mean becomes apparent when we apply them to the average house price across all 5 capitals at the start of the year.

Based on this data, the average homeowner in Sydney is set to gain $216,300 in equity over the course of 2021. This gain is more than double the current average salary of $92,034. Melbournian homeowners are set to gain 1.3 times the average salary, with Brisbane owners just exceeding it slightly.

Australian Bureau of Statistics data backs this trend. The total amount borrowed by owner-occupiers in any one month in Australia surpassed $16 billion for the first time in October 2020. It has not dipped below since, passing $20 billion in December 2020, and March and April 2021.

One positive thing borrowers can take from this is that competition between banks for owner-occupiers is fierce, and there are some great sub-2% fixed rates available at the moment. However, it's worth looking into this now if you're searching for refinancing or pre-approval.

A stagnant cash rate does not mean commercial rates will stay put. We've already seen Westpac, CBA and UBank raise interest rates for some loans independent of the cash rate.

Whether these price increases actually come to fruition, however, is yet to be determined.

And please remember that the housing market is currently in the middle of a very unpredictable phase. However, right now it looks like the momentum in the Australian housing market is far from exhausted.

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Graham Cooke is the head of consumer research at Finder, where he runs the global insights team. One of Australia's leading personal finance experts, he regularly discusses the housing market on ABC News, Channel 7 and 9 News, Today and Sunrise. A seasoned data journalist, Graham edits Finder's RBA Cash Rate Survey, Insights blog and Consumer Sentiment Tracker. He has written articles for publications including Westpac Wire, Homely and Soho and judged financial awards for the Australian Financial Review and the Australian Mortgage Awards. You can follow him on Twitter at @gcooke42.
Jo Williams
June 9, 2021 9.03pm

Just wondering why Hobart was left out of this? The information would also be of great interest as a state of Australia

Money magazine
June 10, 2021 12.06pm

Hi Jo,

This story uses data from CoreLogic's Home Property Value Index, which only covers Sydney, Melbourne, Perth, Brisbane and Adelaide.

- Money team

Laura Claire
June 10, 2021 11.25am

Same with ACT, why wasn't canberra included?

Money magazine
June 10, 2021 12.07pm

Hi Laura,

Unfortunately, the CoreLogic Home Property Value Index does not cover all the capital cities.

- Money team

Andy B
June 12, 2021 11.39am

None of these figures from CoreLogic ever include Gold Coast, which is Australia's No 6 city and is larger than some capital cities such as Canberra, Darwin and Hobart. Lumping Gold Coast in with all other regional areas makes no sense or logic whatsoever.