CoreLogic‘s historical data reveals that the timing of property purchases is essential.
Recent analysis by the data firm reveals that 2021 was the most prevalent year for recent home purchases, with approximately 549,000 homes sold in that 12-month span, accounting for 5.3 percent of the housing stock.
This period was marked by a fear of missing out, as the COVID-19 pandemic had caused a brief dip in prices, Australians were financially buoyant from time spent at home, and interest rates were at historic lows, with projections suggesting they would remain low for some time.
Those who moved quickly in 2020 reaped the benefits of home ownership, and many Australians feared missing out if they did not act similarly. Yet, 2021 brought some of the most dramatic price shifts in Australian real estate history. CoreLogic’s data suggests that, despite 2021 being the peak year for recent home purchases, there was no need for such haste.
Eliza Owen, CoreLogic’s head of research, pointed out that nationally, home values have risen by 7.6 percent since the end of 2021. This growth is less significant compared to the gains realized by those who purchased a year later, when market values briefly fell due to rising interest rates before reaching new record highs.
According to the data, home values have risen by an average of 13.1 percent since 2022.
Moreover, average mortgage rates for existing owner-occupied borrowers have surged by 335 basis points since the end of 2021, causing significant “sticker shock” for those who bought in 2021. As a result, these buyers have typically experienced a roughly 50 percent increase in their mortgage repayments since their initial purchase.
National statistics often mask individual market trends, and each capital city presents a unique picture.
In Hobart, homes tend to have older purchase dates relative to other regions. The most frequent last sale date in Hobart was 2017, with 4 percent of homes being purchased that year. Buyers from 2017 are likely to have witnessed a substantial increase in their property values, as CoreLogic’s index indicates a 45.7 percent rise in Hobart’s home values from December 2017 to July of this year.
Although property investment is generally seen as a long-term strategy, CoreLogic’s data shows that one in five homes has been traded in the market over the past five years.
This turnover rate is notably higher in some capitals where investment potential is particularly attractive.
Perth has experienced the highest percentage of stock sold in 2024 so far, at 3.2 percent, whereas Brisbane has seen the largest share of stock transacted over the past five years, reaching an impressive 24.6 percent.
Looking ahead to 2024, CoreLogic predicts that the year will likely end with 4.9 percent of housing stock recording new sale dates. Buyers in 2024 should be prepared for a longer wait to see their investments appreciate.
Owen highlighted that while buyers in 2024 might not experience significant short-term capital growth, mortgage affordability is anticipated to improve over time. There is a general expectation of a decrease in the cash rate through 2025, accompanied by income growth.
However, it remains uncertain whether turnover rates will increase in 2025. While a looser monetary policy could enhance confidence and borrowing capacity, affordability issues are likely to continue as a hurdle for homebuyers, particularly for those who have found it challenging to save due to recent high living costs.
