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Biggest monthly gain in 17 years for Aussie house prices

CoreLogic monthly Home Value Index

Australian property values are proving more than resilient in the face of the global pandemic, but some headwinds may lie ahead.

Australian house prices have posted their biggest monthly gain in more than 17 years as low interest rates, short supply and government stimulus continue to fuel a strong recovery from the lowest COVID-19 slump.

According to the latest analysis from CoreLogic, property values improved in every capital city over February, with Sydney and Hobart the strongest performers.

The combined national gain of 2.1% was the largest month-on-month value increase since August 2003.  

Capital city Month Quarter Annual
Sydney 2.5% 3.6% 2.8%
Melbourne 2.1% 3.5% -1.3%
Brisbane 1.5% 3.5% 5%
Adelaide 0.8% 2.7% 7.3%
Perth 1.5% 4.2% 4.6%
Hobart 2.5% 4.8% 8.7%
Darwin 0.7% 5.5% 13.8%
Canberra 1.9% 3.7% 9.7%
Combined capitals 2% 3.6% 2.6%
Combined regional 2.1% 5.4% 9.4%
National 2.1% 4% 4%

Source: CoreLogic.

Property prices overall have gone up 4% since 1 March 2020, the month in which Australia closed its borders to all non-residents and social distancing rules were imposed to combat the growing pandemic.

CoreLogic's monthly Home Value Index report noted that "overall, Australia’s housing market is now well entrenched in one of the strongest growth phases on record.

"For housing values and activity to be surging during a global pandemic seems counterintuitive, however the factors driving this growth are significant and diverse," the report said, citing record low mortgage rates, improved consumer sentiment and record low advertised stock levels among those factors.

The report also warned, however, that "there are some headwinds ahead in the form of a reduction in fiscal support from the federal government, home loan deferral arrangements expiring and migration remaining stalled.

"The wind-up of JobKeeper and the COVID supplement for JobSeeker is likely to cause a temporary slowdown in the economic recovery, which could slow some of the housing market exuberance," it said. 

Despite these cautious notes, however, CommBank Senior Economist Kristina Clifton still forecasts "strong gains ahead of 14% over the next two years.

"The leading indicators of dwelling prices are strong. In particular lending is growing at a strong pace and auction clearance rates are very high," she said.

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.