Property prices post 3pc gain in 2020
Australia's housing market finished three per cent higher over 2020 despite a turbulent year, with all bar one capital city recording annual growth and the regions reporting the strongest growth in a decade.
December marked the third consecutive month of consecutive national price gains, according to property researcher CoreLogic, with the rise of 1 per cent last month capping off 2.3 per cent growth over the period.
Property prices in 2020 finished up 3 per cent overall, with the regional housing prices more three times higher than the capitals.
Last year was one of extremes for the housing market.
February marked the end of the fastest relative price recovery on record, cut short by the introduction of swift social distancing restrictions in March which forced the market into isolation through autumn and caused the industry to scramble to take buying and selling virtual.
International border closures and broadbased uncertainty created a huge disparity between the house and unit market to develop, while the popularity of the regions surged.
Notwithstanding Melbourne's second wave shutdown, the market in much of the country entered recovery mode in the latter half of the year, with strong demand from buyers and low levels of property coming to market, causing prices to surge and marking the end of the country's two prolonged downturns.
Early in the pandemic, the consensus among economists was a prediction of 10 per cent declines. As it turned out, prices fell just 2.1 per cent between April and September.
CoreLogic's research director Tim Lawless said the year was characterised by a mild COVID dip in values and unprecedented volatility in the transactions.
"The number of residential property sales plummeted by 40 per cent through March and April but finished the year with almost 8 per cent more sales relative to a year ago as buyer numbers surged through the second half of the year,' Mr Lawless said.
He said that in hindsight, the rebound in housing market activity and dwelling values was unsurprising given the rapid and substantial monetary and fiscal response from the government and policymakers.
"Record low interest rates played a key role in supporting housing market activity, along with a spectacular rise in consumer confidence as COVID-related restrictions were lifted and forecasts for economic conditions turned out to be overly pessimistic," Mr Lawless said. "Containing the spread of the virus has been critical to Australia's economic and housing market resilience."
Darwin was the strongest performing capital city of the year, up 9 per cent over the past 12 months. The northernmost capital is still the most affordable in the country, but recorded consistent full percentage growth over the second half of the year.
Canberra's strong public service cohort helped prices move 7.5 per cent higher over 2020. Hobart followed with a strong gain of 6.1 per cent despite the rental market being hit by pressure on the holiday rental market due to restrictions. Among other capital cities, Adelaide finished 3.6 per cent higher, Brisbane recorded a 2.1 per cent increase in, while Perth grew 1.9 per cent.
The country's two largest markets bore the brunt of the COVID-19 pandemic. Sydney was up 2.7 per cent, while Melbourne's second lockdown and prolonged hibernation meant it was the only capital to report a loss of 1.3 per cent.
Flight to the country was one of the earliest and most persistent trends to emerge from the pandemic. Buyers who wanted more space and greater workplace flexibility started to seek out properties in a one to two hour radius of capital cities. This was reflected in prices, up 6.9 per cent 2020, the strongest performance relative to the capital cities in over a decade.
On the other hand, high-rise apartments in the inner-city markets faltered, as investors remained largely absent from markets and existing rental properties began to be sold off after struggling to find tenants as border closures cut the number of international students and travellers seeking short-stay lets.
Mr Lawless said the threat of a fiscal cliff and a rise in distressed sales is becoming less likely in 2021. Prolonged stimulus from the federal government and the recovery of unemployment figures has improved the economic outlook.
He added the March expiry of mortgage repayment holidays will have less of an impact, as many homeowners have already begun to pay down their debts. October data from APRA showed home loan deferrals dropped to $68.2Bn or 3.9 per cent.
Originally published as Property prices post 3pc gain in 2020