Lockdowns slowed the market, but they didn't stop it.
The property market in August 2021 kept moving higher, even as large parts of the country sat in lockdown. CoreLogic recorded a national home value increase of 1.5% for the month, bringing the total gain for the first eight months of 2021 to 15.8%. Over the 12 months to August, values were up 18.4%. That is a remarkable run by any measure.
For context, wages grew at a fraction of that pace. Property prices rose nearly 11 times faster than wages over the same 12-month period. For buyers who have been sitting on the sidelines, that gap is a reminder that waiting tends to cost more than it saves. Our borrowing power calculator can help you understand what you can actually afford to borrow right now.
This update follows a string of strong results throughout 2021. If you want to see how August compares to earlier in the year, our June 2021 property market update covers the record annual growth rate recorded at the end of the financial year.
Property market August 2021: Supply crunch
A lot of buyers expected lockdowns to cool things down. The data tells a different story.
Fewer properties were listed during the lockdown period, and fewer sales were completed. But the shortage of available homes actually kept prices firm. Buyers competing for limited stock have less negotiating power, and that dynamic kept values rising even when transaction activity fell.
The shift in listing volumes was dramatic. Back in May 2021, newly advertised stock was running 19.7% above the five-year seasonal average. By August, that had flipped entirely. New listings were 5.8% below the average. In just a few months, the market went from a modest oversupply of fresh listings to a genuine shortage.
For sellers, this was a favourable environment. Vendors held firm on their price expectations and were not offering discounts from their initial asking prices. A large proportion of homes sold before even reaching auction, and those that did go to auction achieved strong results.
Sales volumes and what they tell us
Sales did fall over the three months to August 2021. Nationally, transaction numbers were down 9% compared with the previous quarter. Sydney saw a 19% drop and Melbourne a 34% drop, both cities deep in extended lockdowns during that period.
Those figures sound concerning at first glance, but the context changes things considerably. Despite the quarterly decline, national sales were still running 30% above the five-year average. At the same time, total advertised listings were 29% below that same average. More buyers chasing fewer properties. That imbalance is what keeps prices rising even when the pace of buying slows.
The takeaway for buyers: low listing volumes are not a reason to delay. A market with fewer choices and more competition is not one where patient buyers are typically rewarded with lower prices.
Houses vs units
Capital city houses have outperformed units throughout this growth cycle, but the gap has been narrowing. In the first quarter of 2021 the spread was 1.1 percentage points. By August it had narrowed to 0.7 percentage points. Units are catching up.
In Sydney the difference is still very wide in dollar terms. Units cost roughly $470,000 less than houses on average. For many buyers, that price gap is a genuine pathway into the market, particularly in sought-after suburbs where houses have moved well beyond reach.
The monthly growth rate for Sydney houses also tells an interesting story. In March 2021 Sydney houses were rising at around 2 percentage points per month. By August that had dropped to 0.6 percentage points. The pace has moderated, but cumulative gains have still been substantial.
For buyers trying to work out whether a house or a unit better suits their budget and goals, it is worth modelling both options. Our loan repayment calculator makes it easy to compare different purchase prices and loan structures side by side.
Rents surge to 13-year high
Rents did not just tick up in the 12 months to August 2021. They surged. The national average rent rose 8.2% over the year, the fastest annual increase since 2008. That is a 13-year high for rental growth.
Houses led the way. House rents grew 9.9% nationally over the 12-month period. Unit rents were up 4%, a more modest result but still meaningful for tenants on fixed incomes.
For investors, these numbers reinforce the case for holding residential property. Strong rental demand, tight vacancy rates and rising rents combine to improve yields and reduce the carrying cost of an investment property. If you have been on the fence about whether now is the right time to grow your portfolio, the rental market data from August 2021 makes a compelling argument.
Heading into spring, listings were beginning to ramp up in Brisbane, Adelaide, Perth and Hobart, giving buyers in those cities more choice. Sydney and Melbourne were a different story. With both cities still in lockdown, the traditional spring uplift in new listings was not happening, keeping supply particularly tight.
Tips for buying in this market
Buying in a competitive market with limited stock takes preparation. Here are the things worth sorting out before you start making offers.
The conditions in August 2021 favoured prepared buyers over passive ones. The data is clear: supply is tight, demand is persistent and prices are still moving. Getting your finances in order now puts you in the best position to act when the right property comes up.
Common questions
Q: Why did prices keep rising when lockdowns reduced sales activity?
The key was supply. When lockdowns hit, fewer sellers chose to list their homes. That pushed available stock well below the five-year seasonal average. With more buyers competing for fewer properties, sellers had little reason to discount. The result was continued price growth despite lower transaction volumes. Tight supply trumped reduced demand.
Q: Is the narrowing gap between house and unit growth a sign units are becoming better value?
It reflects a shift in what buyers can afford more than a change in underlying preference. As houses became less accessible for many buyers, particularly in Sydney and Melbourne, more demand moved toward units. That shift in buyer behaviour pushed unit price growth higher. For budget-conscious buyers, units can offer a genuine entry point into suburbs that would otherwise be out of reach.
Q: Should renters consider buying given how fast rents are rising?
Rising rents reduce one of the traditional arguments for staying in the rental market: that renting is cheaper than owning. When rents rise 8% in a year, the monthly cost gap between renting and owning narrows. For renters who have a deposit and stable income, the August 2021 rental data was another reason to revisit the rent-versus-buy calculation with a mortgage broker.