House price growth recovery remains solid in Australia

Australia’s annual house price growth recovery has remained solid following the pandemic disruption, although trending lower than the global average, where house prices are rising at their fastest rate in almost three years.

The low interest rate environment is continuing to draw more investors in 2021. This comes after several years of owner-occupiers dominating the residential market — a consequence of the move towards a more responsible lending environment.

This has resulted in many first home buyers, once again, being priced out of the major cities given this has coincided with a solid house price recovery following the pandemic disruption.

For investors, rental growth has started to return to suburbs with minimal new supply recorded in recent years.

The diminishing pipeline of new projects over the coming years is likely to keep vacancy at bay. This is likely to also offset the unexpected fall in population growth given the temporary pause in overseas migration.

Rental growth is strongest across the greater cities of Perth, Darwin and Adelaide for both houses and apartments, with vacancy trending below 1.3%. These cities also offer a compelling relative price point against the bigger cities.

As the pandemic challenged the way we work, rest and play, regional towns highlighted their place on the map. Those relocating or buying a second home pushed major regional areas to record 9.6% house price growth in 2020, compared to the Australian average 5.8%.

How did each city and regional area perform? Read our latest Australian Residential Review here.