Posted on April 12th, 2023

In the post-pandemic world, has the Australian property market returned to ‘normal’?

Undeniably, the Covid-19 pandemic transformed Australia’s housing market. The early pandemic-induced closure of cities, coupled with unprecedented economic stimulus measures and interest rate cuts, sparked a profound shift in the real estate landscape.

At a time when the Work from home (WFH) model became the new norm, many home-seekers developed a keen preference for detached housing over units, as well as growing a fondness for regional areas. Moreover, Government incentives successfully diversified the demographics of homebuyers, with more first-time buyers entering the market than ever before.

Now that we are three years on, it’s time to look at the five ways the Australian property market has changed since the pandemic.

1. Australian property prices have increased by almost 15%

According to CoreLogic national housing values are now 14.8% higher than where they were in March 2020. We all bore witness to how much the pandemic and ensuing lockdowns had a flow-on effect within the Australian economy. The reduced economic activity caused an initial decline in investor demand, leading to a drop in residential sales and listing activity. Between April and September 2020, home values dipped by 2.1%. This was quickly reversed, however, by government stimulus packages and record low-interest rates.

Showing a remarkable propensity towards growth, the median dwelling value in Australia climbed 24.6%.between April 2020 and February 2022, according to CoreLogic’s Home Value Index – the most dramatic surge in home values to date. Compared to the close of last year, clearance rates have been trending higher, and Australian house prices are beginning to rise again. With Australia’s housing values now sitting 14.8% higher than what they were in early 2020, this turnaround highlights the unwavering resilience of Australia’s residential property market.

2. Greater variance in dwelling values by state

The Australian housing market continues to showcase a diverse landscape, presenting both opportunities and challenges for potential homebuyers and investors. Comparing March 2020 vs March 2023, CoreLogic’s national Home Value Index has climbed significantly beyond pre-pandemic figures.Yet, it’s also important to acknowledge the differences in values between States and Territories. For instance, the regional SA market has experienced an impressive increase of 47.6% in the past three years. Meanwhile, Melbourne’s housing market has seemingly stabilised, with home values returning to their pre-pandemic status and aligning closely with the peak of the previous cycle back in November 2017.

Perth has remained remarkably resilient with home prices declining only -0.9% since hitting a peak in July 2022. By understanding these variations and keeping abreast of market trends, prospective buyers and investors can make more informed decisions and navigate the ever-evolving landscape of Australia’s housing market.

3. A shift in homebuyer preferences

During the lockdown period, buyers leaned towards houses, likely due to the increased time spent at home and the desire for more space. Interestingly, investors, who typically gravitate towards units, made up a smaller part of the market, averaging 29.5% of new housing lending, a notable drop from their 36.8% share in the previous decade. This created a surge in the proportion of residential sales that were detached houses, reaching a peak of 75.2% in October 2020.

As the HomeBuilder scheme came to a close in 2021, the percentage of homes purchased vs apartments fell back to pre-COVID levels. This rebalancing has shifted the housing market somewhat back to its pre-pandemic state, and units are becoming increasingly attractive to buyers. Some analysts have suggested that this trend will continue, and over the next 12 months, we may see a further boost in sales.

4. Growth of regional housing prices

As reported last year by the Australian Financial Review, during the pandemic “regional housing prices grew at almost twice the speed of city properties – 36.5 percent compared with 21.4 percent.” This growth in regional house prices was partly due to a shortage of stock, but also fueled by factors such as cash rate increases, affordability constraints, and weakening consumer sentiment. The WFH model also influenced people’s decisions to look for property in more affordable areas. Larger homes with backyards became major drawcards, as well people started looking at making sea and tree-changes.

However, as society navigates a post-pandemic world, the magnetic pull of capital cities will reassert itself as consumer confidence rebounds, ushering in a new era of opportunity and competition in the urban housing market.

5. Greater demand in the rental market

As more people opted for individual housing options rather than share housing during the lockdowns, the demand for rentals surged. This transition significantly contributed to an upswing in rent values, with an astounding 23.1% cumulative growth since the onset of the pandemic.

As we anticipate migration levels to revert to pre-pandemic levels this year, there is little indication a decline in rent values is on the cards. This situation is further exacerbated by the limited supply of new rental properties, further underpinned by rising interest rates. These extraordinary market conditions have not only led to an unprecedented increase in rents but also laid the groundwork for new precedents in the housing market, such as the build-to-rent model. All of these indicators point to a future of higher rent prices, particularly in the most populous cities like Sydney and Melbourne, proving that now is an ideal time for investors to enter the rental market and take advantage of the growth in demand.

Final thoughts

The Australian housing market has continued to defy the odds throughout the past turbulent year, with overall dwelling values climbing above pre-pandemic levels. In addition, the market has seen an increased demand for houses and a surge in rent values. While these changes have presented opportunities for buyers and investors to capitalise on the market, it is still important to understand the nuances of different regions and keep abreast of new trends in order to make informed decisions.

At Ironfish, we specialise in empowering Australian property investors with the knowledge and resources necessary to make successful investments. Our team of experts has unrivalled experience in the industry, making it possible for our clients to take advantage of the current market conditions and be well-positioned for the future. We provide our investors with exclusive access to our expert team’s insights, a customised support system to champion their prosperity, and strategic partnerships with top-tier developers to offer exceptional pricing opportunities. This confluence of knowledge, foresight, and personalised attention empowers investors to seize the best opportunities and navigate the ever-changing landscape of property investment with confidence and ease. Together, we are forging a brighter, more prosperous future, one property at a time

May 14th, 2024 / How to invest, Financial wellbeing

How to fast-track your wealth-building strategy

Without a plan, building wealth can be a slow and uncertain process. But with the right strategy, you can fast-track your financial goals and achieve wealth in less time. Real estate investment stands as a reliable, time-tested method to grow long-term wealth in a relatively short period. Real estat

May 7th, 2024 / How to invest, Property trends, Data & research

Investing in new vs established properties – Which is the best?

With the advent of reality TV shows like The Block, many property investors are fixed on the idea of finding a ‘fixer-upper’, a diamond in the rough that can be transformed into a lucrative investment. The belief is that by investing in an established property, fixing it up and then sell

May 1st, 2024 / Message from our CEO, How to invest

The two-hand theory to building your fortune through property

We all know that to live a healthy, fulfilled life, one has to find balance. Balance between work and play, exercise and rest, spending time with people and spending time alone. So, what if we applied this theory of balance as the key to living a wealthy life? This is what I call the Two-Hand Appro

April 29th, 2024 / How to invest, Financial wellbeing, SMSF

Using your SMSF to invest in property

It appears as though the self-managed superannuation fund (SMSF) revolution in Australia is now in full swing. Currently, approximately 1.1 million Australians manage their own superannuation through SMSFs. According to Deloitte’s 2022 data, Australian males aged 45 to 49 typically have $224,2

April 16th, 2024 / Data & research, Equity

Manufacturing Instant Equity Through Property Investing

Have you ever wondered how some investors seem to magically make money in real estate right after purchasing a property? The secret isn’t anything supernatural or even complicated. It’s simply about understanding the concept of manufacturing instant equity through property investing. By