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Strongest annual price growth in over 30 years for Aussie properties

CoreLogic monthly Home Value Index

The Australian property market has seen massive value gains over the past 12 months, but is the pace slowing?

Australian house prices increased by more than 20% over the past 12 months, with concerns worsening affordability is squeezing even more potential first home buyers out of the housing market.

According to the latest data from CoreLogic, property prices across the combined capital cities and regions were up 1.5% over September, 4.8% for the quarter and 20.3% for the 12 months to 30 September. It's the fastest annual growth rate since the year ending June 1989, although CoreLogic says the monthly growth figures indicate a slowing down from the peak rate of 2.8% in March this year.

Hobart, Canberra and Sydney posted the biggest annual growth of the capitals, although even the weakest performer, Melbourne, was up 15% over the year.

Capital city Month Quarter Annual
Sydney 1.9% 5.7% 23.6%
Melbourne 0.8% 3.3% 15%
Brisbane 1.8% 5.9% 19.9%
Adelaide 1.9% 5.5% 19.1%
Perth 0.3% 1.2% 18.1%
Hobart 2.3% 6.4% 26.8%
Darwin 0.1% 1.7% 20.2%
Canberra 2% 6.9% 24.4%
Combined capitals 1.5% 4.7% 19.5%
Combined regional 1.7% 5.1% 23.1%
National 1.5% 4.8% 20.3%

Source: CoreLogic. 

CoreLogic research director, Tim Lawless, argued the slowing growth conditions are due to higher entry barriers for non-home owners combined with fewer government incentives to enter the market.

"“With housing values rising substantially faster than household incomes, raising a deposit has become more challenging for most cohorts of the market, especially first home buyers." he said.

"Sydney is a prime example, where the median house value is now just over $1.3 million. In order to raise a 20% deposit, the typical Sydney house buyer would need around $262,300. Existing home owners looking to upgrade, downsize or move home may be less impacted as they have had the benefit of equity that has accrued as housing values surged."

Lawless also noted that while lending to owner-occupier first home buyers fell by more than 20% in the first seven months of 2021, the number of first home buyers taking out an investment home loan went up by 45% over the same period, "suggesting more first home buyers are choosing to ‘rent vest’ as a way of getting their foot in the door”. 

CommBank Head of Australian Economics, Gareth Aird, noted house price gains are well outpacing those of apartments, up 22.7% and 10.4% respectively over the past year. He also highlighted the above-average number of home sales despite low advertised supply.

"Put simply, it's a seller's market," Aird said, arguing "the current trends in household debt repayment, new lending and home prices essentially all boil down to monetary policy". 

Book an appointment with a CommBank Home Lending Specialist, instantly.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Past performance is no guarantee of future performance. The commentary provided from external companies that are not a member of the Commonwealth Bank of Australia Group of Companies (the CBA Group) does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. The CBA Group does not accept any liability for losses or damage arising from any reliance on external companies and their products, services and material.