Look how many property records were broken in 2021

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After a bumpy 2020, 2021 has rewritten the property record books.

2022From property price growth to interest rates, to new home buyers, to refinancing – no matter which way you look records have been broken.

After 2020, a year fraught with the effects of the global COVID-19 pandemic that wreaked havoc on world markets, forcing families into their homes with lockdowns and businesses to shutter their doors, 2021 saw the advent of safe & effective vaccines and despite the lockdowns experienced in our South Eastern states, 2021 was an amazing year for anyone involved in property.

For many people, their home or investment properties earned more than they did as property values reached new highs and real estate records were broken.

Let’s look at them…

1. Prices rose at the fastest pace in more than three decades

In 2021 we experienced a property boom, the strength of which no one envisaged at the beginning of the year.

The level of price growth has been the fastest in more than 3 decades, but in real terms, it’s the 3rd fastest in a century.

Over the past year, Sydney house prices have risen over 24%, Melbourne 15%, and Brisbane 20%.

Overall dwelling prices have risen 23% in capital cities and in the regions, they’ve surged by 30%.

And as a result, the number of $1million suburbs across Australia hit a record high.

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Property Market

Moving forward, property prices will continue to grow into 2022, but at a much slower pace, yet I predict that in 12 months’ time you record highs will be reached in property values around Australia.

However, not all property markets will continue growing strongly moving forward.

We’re in for a 2-tier property market moving forward.

Properties located in the inner and middle-ring suburbs, particularly in gentrifying locations, will outperform cheaper properties in the outer suburbs.

While the outer suburban and more affordable end of the markets performed strongly in 2021, affordability is now becoming an issue as the locals have had minimum little wages growth of the time when property prices have boomed.

Concept Of Saving Money To Buy A HouseIn these locations, the residents don’t have more money in their pay packet to pay the higher prices the properties are now achieving.

More than that, Covid19 has adversely affected low-income earners to a greater extent than middle and high-income earners who are likely to recover their income back to pre-pandemic levels more quickly, while many have not been hit at all.

Also, high-rise apartment towers in our CBDs, which were already suffering from the adverse publicity of structural problems prior to Covid19, will now become the slums of the future as they are shunned by homeowners and investors.

2. Australians became wealthier than ever before

Wealth

Australian households just keep getting wealthier.

A combination of surging property prices and solid share market gains saw total Aussie household wealth grew 4.4% or $590 billion in the September quarter.

Wealth is up 20.2% on a year ago – the strongest annual gain in 11 1/2 years.

Australia’s total household will hit an all-time high of $13.9 trillion, with wealth per person of $540,179 also sitting at record levels.

And a large part of this growth in wealth is related to owning a home

The total value of all the residential property in Australia was $7.2 trillion at the end of November 202, grew to $8 trillion by April 2021, and the year finished breaking a record with the value of all residential properties now being worth more than $9.4 trillion.

In fact, Australia has become a millionaire factory.

The total number of millionaires in Australia rose 31% from 485,000 to 635,000 during the past year – the biggest rise in recent history.

And these millionaires control $2.77 trillion in investable assets (up 37%).

And a large part of this is related to their ownership of the real estate and their superannuation and share portfolio

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But it wasn’t just the millionaires who became wealthier.

Price GrowthDespite all the challenges Covid has thrown at us Australian household wealth is up 19.7% on a year ago – the strongest annual gain in over 11 years.

The twin effects of rising home prices and superannuation balances propelled net household wealth and wealth per person to record highs.

A recent report by Credit Suisse estimates that as many as 1.8 million Aussies are considered to millionaires today, based on estimates of net household wealth.

And the number of Australian millionaires is expected to grow to 3,100,000 by 2025.

033. Mortgage rates hit historic lows

MortageWe know that the last time the RBA raised interest rates was almost 12 years ago and ever since interest rates have been falling.

In 2021 low interest rates and the easy availability of finance spurred record demand for property pushing prices higher Australia wide.

New lending and refinancing also hit an all-time high – I guess that’s another record that was set.

044. A record number of new listings of properties for sale

House Sales

The number of properties listed for sale on realestate.com.au hit a historic low in June 2021.

That’s not really surprising with many vendors being nervous about the ability to sell their homes during the challenging time of on-again, off-again lockdowns.

Of course, anyone actively searching for property this year would have felt the shortage of A-grade homes and investment-grade properties on the market.

This lopsided supply and demand ratio is one of the reasons property values surged during the year.

However, as lockdowns lifted and restrictions eased, new listings of property sales come to 22.8% in the last three months of the year.

Also, there have been 116,684 capital city auctions held over the 2021 year to date, overtaking 2017 is the busiest auction year on record (109,268)

This is made for a robust spring selling season with new listings finishing 19.2% higher than the five-year average.

Clearly the extraordinary price growth we experienced over the year has seen sellers responding with increased confidence to list their properties for sale.

But remember…these sellers have to live somewhere; meaning many are going to upgrade their homes using the increased equity they’ve gained in their homes.

And this means our property markets will remain busy in 2022.

055. Demand for housing hit record highs

Demand2021 was a year that many Australian families upgraded their homes while a record number of Aussies became first home buyers.

The combination of low-interest rates, the impetus from shifting lifestyle preferences, an influx of expats, low supply of properties for sale, forced savings, and government support measures have all fuelled Australia’s insatiable appetite for property to historic highs for much of this year.

And this record demand at a time low supply of properties for sale led to historic price growth.

2021 also saw a record number of first home buyers entering the market, the likes of which had not been seen since the impetus of the first homeowners’ grants following the global financial crisis.

066. Properties sold at record speed across the country

Resale PropertyAnother record broken in 2021 was the speed at which many properties were sold.

With multiple buyers keen to purchase the limited number of good properties for sale, many were forced to make quick decisions and, in some cases, pay a premium to purchase their property.

Over course, looking back at the premium paid at the beginning of the year, most buyers would be very pleased with their decision.

As for the records broken – in November, the median number of days a property was listed on realestate.com.au before it was sold was 30 days, a historic low.

Even auction campaigns were shortened to 2 to 3 weeks rather than the traditional 4 to 6-week selling campaign, with record auction clearance rates meaning most properties sold considerably above their reserve price.

At the same time, many private sales were sold significantly above the asking price; and while there is no way of accurately measuring this, I would venture to say we had a record number of off-market sales in 2021.

2021 was well and truly a “sellers’ market”, but as the year came to an end, even though buyers continued to outweigh sellers, there were signs that balance may be slowly shifting as more properties came on the market for sale.

077. Property sales volumes soared

Property RiseAn estimated 614,635 properties changed hands in the past 12 months, the highest level in almost 18 years.

In fact, in November property transactions were 32.6% above the decade annual average.

2021 enjoyed a “perfect storm of low interest rates, fiscal and institutional support for households, high household savings and relatively low levels of properties for sale started the property boom of 2021 that people will be talking about for years to come.

At the same time, the first weekend in December saw a record number of properties taken to auction which resulted in a record dollar value of properties transacted.

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098. Rentals finally rose

After several years of slow rental growth, in the year to November Australian rent for using Chris 9.4% which was the strongest and you will appreciate any rent since January 2008.

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119 . Capital cities experienced a net loss of people

Intrstate MigrationAustralia’s closed borders put a halt to immigration in 2021, but tight borders didn’t stop Aussies from moving house.

In the March quarter of 2021, data from the ABS showed our capital cities recorded a net loss of 11,800 people, more than double the decade average and the largest quarterly loss on record; and this was prior to the arrival of the delta variant.

Many of us learned we can work remotely which led to a net 43,000 people exiting capital cities in favour of regional areas, with more of us opting for a sea or tree change to take advantage of their remote workability.

That was the biggest net influx to the regions since Australian Bureau of Statistics records began in 2001.

1210. Demand for luxury property soared and the $3 million clubs doubled

Luxury PropertyWhile the value of most properties increased in 2021 the year finished with the luxury end of the market outperforming.

Many of us re-assessed their housing needs over the year, with wealthy Australian’s and returning expats opting for lifestyle and wellbeing upgrades.

This meant that Australia’s $3million suburb club doubled again in 2021.

Also, over the past 12 months, the number of suburbs with a median price of $1million doubled as 392 new suburbs nationally joined the million-dollar club.

1311. Demand for regional property soared, fuelling record-breaking price growth

Price RiseOne of the side effects of the pandemic and the resultant lockdowns was that both net regional and interstate migration trended above long-run averages, resulting in 2021 being the year when combined regional housing markets have outperformed, combined capital cities in terms of price growth.

Of course, that’s not really a fair comparison as there are literally hundreds of regional locations and thousands of different suburbs each performing differently based on their individual local factors.

And as the year ended this trend has reversed with our capital cities outperforming.

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ALSO READ: 2021, a year that defied the property odds

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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au


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