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aus property market May 2021

Home values continue to rise, but we may be reaching a peak

May 12, 2021 10:00 am by Upside

“How much more can house prices rise? How long can this go on for?!” is something we’re hearing quite frequently when it comes to Australian house prices.

The pace of property growth may have slowed this month, but home values still continue to rise at a rapid pace. Our Upside agents on the front line have reported continued strong buyer demand and turnout at our open for inspections and auctions these past few weeks.

With home values and buyer demand still at a high against a backdrop of low volumes of homes for sale, early indications that the market is coming off the March peak are starting to show.

What we’re seeing on the ground is almost an exact reflection of the current state of the Australian property market.

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Buyer demand continues to be strong

According to the latest Hedonic Home Value index, Australian housing values rose by 6.8% in the three months to April - the highest quarterly growth rate since December 1988. While every capital city is recording a rapid rise in home values, the daily CoreLogic Home Value index has started to slow, suggesting the ease of momentum across the housing market.

CoreLogic’s research director, Tim Lawless, says the pace of capital gains could slow further over the coming months as inventory levels rise and affordability constraints dampen housing demand.

The slowdown in housing value appreciation is unsurprising given the rapid rate of growth seen over the past six months, especially in the context of subdued wages growth. With housing prices rising faster than incomes, it’s likely price sensitive sectors of the market, such as first home buyers and lower income households, are finding it harder to save for a deposit and transactional costs.”

The Australian Bureau of Statistics already reports a -4% fall in the value of first home buyer home loans through February, the first drop since May last year; a sign that first home buyers have been priced out of the rising property market.

Despite the slowdown, positive housing market conditions remain geographically broad-based with every capital city and ‘rest-of-state’ region continuing to record a lift in dwelling values over the month.

Change in Australian dwelling values in April 2021

Month Quarter Annual Total Return Median value
Sydney 2.40% 8.80% 7.50% 10.10% $950,457
Melbourne 1.30% 5.80% 2.20% 5.30% $744,679
Brisbane 1.70% 5.60% 8.30% 12.80% $558,295
Adelaide 2.00% 4.30% 10.30% 14.90% $492,285
Perth 0.80% 4.20% 6.70% 11.50% $513,598
Hobart 1.00% 7.00% 13.80% 19.20% $561,254
Darwin 2.70% 5.80% 15.30% 21.40% $465,976
Canberra 1.90% 6.70% 14.20% 18.70% $734,107
Combined capitals 1.80% 6.80% 6.40% 9.80% $705,375
Combined regional 1.90% 6.60% 13.00% 18.20% $457,938
National 1.80% 6.80% 7.80% 11.40% $624,997
Source: CoreLogic Hedonic Home Value index as at April 30 2021

Exuberance may be ending, but it’s still a seller’s market - And seller’s are taking advantage!

In further signs that the market may be beginning to simmer down a little, combined capital city clearance rates average 77.6% in the month to May 2nd. While still proving strong selling conditions, this figure is down from the record average clearance rate of 81% through March.

Interestingly, sales volumes increased 22.6% nationally over the 12 months to April, with the median time for a house to sell falling to just 29 days - the lowest level since October 2003!

New listings added to the market are now well above average (a whopping +123.9% compared to this time last year), but strong demand is keeping overall advertised stock levels low, meaning homes are being snapped up by eager buyers.

The number of fresh listings added to the housing market has shown a substantial lift relative to the past two years. 40,630 new residential property listings were added to the market nationally over the four weeks ending April 25; substantially higher relative to the previous two years and almost 14% above the five year average.

According to Mr Lawless, the rise in new listing numbers signals an improvement in vendor confidence.

More homeowners are taking advantage of strong selling conditions while they remain skewed towards vendors rather than buyers. Total advertised stock levels were 25% below the five year average in late April. Such low total listing numbers, at a time when new listings are above average, reflects the strength of buyer demand, fueling the current rapid rate of absorption.”

What the Federal Budget means for real estate

Josh Frydenberg With housing now worth more than $8 trillion (four times the size of Australia’s GDP), it comes as no surprise that the newly announced federal budget has several measures in places to ensure the continued security of Australian property.

Introducing the Budget to the House of Representatives, Treasurer Josh Frydenberg acknowledged the budget was challenging to prepare, but “under the coalition, home ownership will always be supported”.

The headline home ownership initiatives announced in the budget include:

  • The establishment of a Family Home Guarantee: To allow single-parent families to purchase a home with a deposit of as little as 2 per cent.
  • Expansion of the New Home Guarantee: An additional 10,000 places in this 5 per cent deposit scheme will be created, to bolster the success from the program’s first year.
  • An increase to the First Home Super Save Scheme: This will see the maximum amount of voluntary contributions which can be released under the scheme lifted to $50,000 from the previous $30,000 cap.

The budget documents also reveal a number of other key measures designed to support Australian property and the real estate sector. These include:

  • Building Better Regions: Stating that “regional Australia will never be taken for granted”, Mr Frydenberg revealed $250 million will be allocated to regional community infrastructure projects under the Building Better Regions fund, which Mr Frydenberg said will create more jobs.
  • Downsizers: Australians over the age of 60 will be able to contribute up to $300,000 into their superannuation if they downsize their home. It’s expected this will free up more housing stock for younger families. This scheme was previously only available to Australians over the age of 65.

What’s going to happen to the Australian Property Market from here?

The pace of capital gains across Australian housing markets has been close to record breaking, with the national growth rate in March the fastest since 1988… but these growth conditions over the past few months has been unsustainable.

There have already been signs that the exuberance may be reaching a peak, as price growth succumbs to a gradual slowdown in demand due to more and more home buyers being priced out, a rise in fresh homes for sale, higher levels of newly built homes and less government stimulus in the economy.

The likely scenario to brace for is not a reversal in price growth, but for the pace of capital gains to gradually taper over the coming months.

Demand, in the meantime, is expected to continue to be propped up thanks to mortgage rates remaining at their record lows and ongoing consumer confidence - although this remains at the mercy of tighter credit policies.

We are already seeing a lift in new properties coming to market as vendors take advantage of the strong selling conditions, but there is still relentless buyer turnout and demand.

If you’re thinking of selling this year, time is of the essence! Right now is the window of opportunity while total listings still remain lower than average (meaning less competition) to capitalise on the strong buyer surge in this seller’s market.


Upside is an Australian-owned, full-service real estate agency with local real estate agents, low fixed fees and zero commission. Our standard is other agents’ ‘extras’, delivering vendors a complete agent managed service including a full appraisal, open home management, copywriting, photography, signage and advertising. It's the way real estate should be.

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