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state of aus market: March 2021

Why are Australian house values rising at the fastest rate in 17 years

March 4, 2021 10:00 am by Upside

No doubt you’ve been hearing all over the shop - the Australian property market is positively exploding in recent weeks, with prices now rising at the fastest rate in 17 years.

This seller’s market has sent buyers scrambling, driven by a fear of missing out and record low borrowing costs and pushing prices higher amid a low volume of stock for sale.

The latest figures from CoreLogic show that Australian home values have pushed 2.1 per cent higher in February, while the REA Insights Buyer Demand Index, which measures the number of people who are serious about buying on, was also at a record high this week.

The current state of the market in March 2021

In February, CoreLogic recorded the largest month-on-month increase in the national home value index since August 2003. Spurred on by a combination of record low mortgage rates, improving economic conditions, government incentives and low advertised supply levels, Australia’s housing market is in the midst of a broad-based boom.

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Housing values are rising across each of the capital city and rest of state regions, demonstrating the diverse nature of this housing upswing.

According to CoreLogic’s research director, Tim Lawless, a synchronised growth phase like this hasn’t been seen in Australia for more than a decade.

The last time we saw a sustained period where every capital city and rest of state region was rising in value was mid-2009 through to early 2010, as post-GFC stimulus fueled buyer demand.”

Sydney and Melbourne were among the strongest performing markets, bringing Australia’s two largest cities back up from the lows experienced during 2020.

Regional markets also saw a continued growth in price, up 2.1 per cent over the month and ending 9.4 per cent higher year on year, although the gap between capital cities and their regional counterparts is narrowing slightly as cities begin to open back up and many come to remember their reasons for staying rooted in the metropolitan.

One of the factors driving housing prices higher is low advertised supply levels. CoreLogic’s most recent measure of total listing numbers continues to see advertised supply significantly below that of recent years. The number of properties advertised for sale nationally remained 26.2% below 2020 levels over the 28 days ending February 21.

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Whilst available supply remains at historically low levels, the quarterly number of home sales is estimated to be up 35.3 per cent on 2020 levels, with regional dwelling sales 40.6 per cent higher compared with a 32.0 per cent lift in capital city sales.

Mr Lawless believes the mismatch between supply and demand is a central factor pushing prices higher.

Housing inventory is around record lows for this time of the year and buyer demand is well above average. These conditions favour sellers. Buyers are likely confronting a sense of FOMO which limits their ability to negotiate.

"Vendor discounting rates were estimated at a record low of 2.6% in February, and auction clearance rates have consistently been in the high 70% to low 80%, which is well above average.”

What’s driving the Buyer demand?

A far cry from the predictions in early 2020 of an economic crisis, Australia currently finds itself consistently beating forecasts, with the RBA acknowledging the economy is likely to recover six to twelve months earlier than originally expected.

This quick shift to recovery is feeding into a strong rebound in consumer confidence, and instilling households with the confidence to shy away from padding their pockets to spend more.

Currently, buyer demand is being fueled by an increasing number of owner-occupiers (rather than investors) applying for low interest-rate loans, government incentives and reduced fear of COVID-19.

According to the mortgage experts at Shore Financial, mortgage commitments increased by 10.5 per cent in January with new home loan approvals, showcasing 44.3% higher YOY. Due to the largest one month house jump in 17 years and a dramatic surge in new home loans, the property market is at risk of overheating and could potentially force the Reserve Bank to reassess the current record low cash rate.

Economists forecast the RBA to start challenging the interest rate guidance, pricing in the first post COVID-19 rate rise as early as 2022, about two years earlier than RBA’s expectations.

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Out of the frenzy, a new trend emerges: FOMO (Fear of Moving On)

More time spent at home over the 2020 lockdown period has led many to realise that their current homes and lifestyles may not suit their needs in a post-COVID world.

While we currently find ourselves in a seller’s market, many potential sellers are currently finding themselves frozen over selling at market peak, due in large part to the exceptionally low levels of stock available on the market, as well as the possibility that while their own home value was rising, so too may the value of the property they plan to upgrade to next.

As we enter the traditionally peak season for real estate and supply begins to increase (in addition to the tapering off of government stimulus), it is possible that stock levels will rise, slowing down some of the record housing price hikes. It will be a period to be on high alert and aware of the best moves for you and your family.

Selling a home prior to finding another adds pressure to the deadline, but there can be no telling exactly when the current record high prices could ease off. Some things to help combat those feelings of ‘FOMO’ include:

  • Negotiating the delay of settlement for the sold property to buy more time to find another property - instead of 30 days, consider 60 or 90
  • Make your contract of sale subject to the sale of your other property in the terms and conditions
  • Getting your financials organised so you are a step ahead of the other buyers and will be able to leap on the right property when you come across it
  • Bid an attractive offer for your interested property - it’s currently a seller’s market so a hot property will go, quick
  • Research the market so there will be no surprises! Find out what your property could be worth in this current market today by booking a no-obligation, free property appraisal with your local Upside agent to see how your local suburb market has been performing, and where your property sits in comparison. As part of the process, we also supply a detailed market report of properties that have sold in your immediate area in the last 3-6 months.


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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