Newsletter 05/2021

Industry insights

Milk Chocolate Property

AusBG Corporates Members, Milk Chocolate provide an industry insight into the Australia Housing Market for Q1 of this year.

Q1 2021 has ended with new record highs across all capital cities. According to Corelogic, the national home value index increased a further 2.8%, placing values 5.6% above the previous market peak in October 2017. The combined value of Australian dwellings hit $7.9 trillion dollars over the month, which is 3 x the total capitalisation of the stock market. This cements residential property as an important asset class.   

Prices

At the current price levels, there are three distinct sub-markets in Australia: 

  • Sydney (top-tier): Sydney took off significantly and distinctly in comparison with other capital cities since 2009, just after the Global Financial Crisis in 2008. Being a volatile market, the current prices in Sydney are just equal to the same level in 2017. Therefore, we anticipate that Sydney will continue to keep the momentum for the remaining months of 2021 thanks to ultra-low interest rates, low stock, the much-anticipated re-opening of the border.

  • Canberra and Melbourne (the mid-tier): Canberra has been catching up with Melbourne in recent years, and it overtook Melbourne to take the title of the second most expensive property market in Australia. Being a small regional city, Canberra is the capital city where large government departments are located that offer high-paying jobs, coupled with limited land supply and a desirable lifestyle. Canberra is expected to remain a prominent destination to invest in the next few years. Melbourne has a similar size to Sydney in terms of economy and population, yet it offers more affordable housing and more choices than in Sydney. Currently, property in Melbourne is 25% to 30% cheaper than in Sydney.

  • Brisbane, Perth, Adelaide, Hobart, Darwin (the affordable and safe markets): these cities offer lifestyle, affordable price and consistent capital growth over the long term. There is a growing demand for properties from interstate buyers, especially from Sydney in these markets.

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