The two biggest capital cities of Australia, Sydney and Melbourne recorded the slowest and lowest property price growth in the nation at the end of 2021.
The statistics show that the house prices in Sydney increased 0.4 per cent in December while the value of apartments declined by 0.2 per cent. In Melbourne, the median house prices fell by 0.2 per cent and apartment prices increased by 0.3 per cent.
Even with this change and fall in house prices, Sydney and Melbourne’s house prices stay 29.1 per cent and 18.1 per cent higher. In the last 12 months, the apartment median price has increased by 15.3 per cent in Sydney and 8.4 per cent in Melbourne.
Considering Christmas as the perfect opportunity to buy, the Australian property market saw a surge in property listings as the year ended. In addition to the affordability crisis and migration due to the COVID-19 pandemic, the surge in property listings remained one of the major factors in taking the heat out of the Sydney and Melbourne property markets.
The underlying factor for the trend in housing values is the number of homes available to purchase. Since the property listings and advertised stock levels in Melbourne and Sydney are above average and close to normal, the slow growth rate is obvious as compared to cities with a low supply like Brisbane and Adelaide.
Once the stock levels normalize, affordability constraints reduce, and tighter credibility reduces the demand, the growth conditions will subdue. It’s reasonable to expect such growth conditions in 2022.
The top quartile of the property market — most expensive and elite homes are leading the slowdown. Compared to a 3.7 per cent increase in the middle of the year, there was a 2.6 per cent increase in the last three months of the year.
Noticeably in the previous growth cycles, it is noted that the expensive housing market tends to show greater levels of volatility. During the upswing of the market, the housing values rise more than usual and also tend to record a larger decline through a down phase of the cycle.
Talking about other major cities, the house prices in Canberra increased 0.6 per cent in December with Apartments up by 2.1 per cent. The strongest performance was seen in Brisbane with the median house price rising to 3.1 per cent to $782,967 and apartments appreciated by 1.6 per cent to $386,420.
Comparatively, Melbourne was the only capital city with an overall fall of 0.1 per cent. Even Sydney recorded a rise of 0.3 per cent. This was the slowest of all while other city home values increased at a faster rate.
The regions also surged again with NSW houses rising up by 2.5 per cent and Victoria up by 1.7 per cent. These regions support housing demand and the affordability challenge is comparatively lesser than larger capitals. It is notable that Queensland has recorded a strong interstate migration after the COVID-19 pandemic.
The level of response is higher in these regions even though the trend in advertised supply and listings remain below average in these markets.
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