Australia's property boom ended the financial year on a high note.
The property market in June 2021 capped an extraordinary financial year. National home values rose 1.9% for the month, with every capital city recording growth. Annual growth hit 13.5%, the highest rate since April 2004, when the early 2000s boom was drawing to a close.
Hobart led the monthly results with a 3% gain, while Perth had the smallest increase at 0.2%. Sydney rose 2.6% and Melbourne gained 1.5%. Regional Australia posted 2% for the month, just nudging ahead of the combined capitals at 1.9%.
To understand the trajectory of growth across this period, it helps to compare these figures against the property market results for May 2021, when national values rose 2.2%. Use our loan repayment calculator to understand what rising property prices mean for your monthly commitments.
Capitals vs regions
Over the full 2020-21 financial year, the three capital cities with the strongest annual growth were Darwin at 21%, Hobart at 19.6% and Canberra at 18.1%.
On the regional side, the standouts were Regional New South Wales at 21.1%, Regional Tasmania at 20.8% and Regional Queensland at 17.1%.
The growth was driven largely by demand-side factors: high consumer confidence, low home loan rates and improving employment conditions. At the same time, advertised stock remained lean, creating urgency among buyers and supporting upward price pressure across the country.
Transaction volumes
CoreLogic estimated approximately 582,900 national property transactions took place in the 2020-21 financial year. That was the highest sales volume recorded since February 2004.
Sydney was the busiest market with 110,064 sales, followed by Melbourne at 89,234 and Regional Queensland at 80,549.
Fresh listings in the three months to June were 7.9% above the five-year average for the June quarter, yet total advertised stock levels remained 25% below that same average. The reason: sales volume in the quarter reached 197,450 nationally, well above the 126,320 new listings added over the same period. Supply could not keep up with the pace of buying.
Rent growth surges
Rent values nationally grew 6.6% in the year to June 2021, the strongest annual rental appreciation since February 2009. Darwin again led the way with 21.8% annual rental growth.
Even markets that were heavily impacted by COVID were beginning to recover. Sydney unit rents were 1.1% lower over the year to June, but that was a significant improvement from the 5.7% annual fall recorded to December 2020. Melbourne’s annual rent change to June was -6.4%, also recovering from a worse position of -8.2% in the year to March 2021.
For investors weighing up whether to enter or expand their portfolio at this point in the cycle, our overview of property investment strategies used by experienced investors is worth reading.
Signs of slowdown
While the 1.9% monthly rise in June 2021 was well above the decade average of 0.4%, the pace had slowed from the 2.2% recorded in May. Canberra was the only capital city to actually accelerate from May to June, climbing from 1.7% to 2.3%.
Pert and Darwin showed the most notable signs of momentum loss. Perth had averaged 1.4% monthly growth between January and May, but fell to just 0.2% in June. Darwin averaged 2.1% from January to May before dropping to 0.8% in June. Both cities also had the lowest ratio of sales to new listings among the capital cities, suggesting the demand surge was easing in those markets first.
The upper end of the market was also cooling. Growth in the top quartile of combined capital values slowed to 8% in June, down from 9.2% in the three months to May. CoreLogic’s Eliza Owen noted this was the first time in nine months that high-tier growth had not accelerated, and that the rest of the market tends to follow movements at the top.
Affordability remained a real challenge for first home buyers, though government schemes and home loan options for first home buyers were helping some buyers get their foot in the door.
Common questions
Q: Was the June 2021 slowdown a sign that the property boom was ending?
Not immediately. While growth was easing from its peaks, the market was still well above historical average monthly gains. The key questions at the time were how long COVID lockdowns would last and whether the government would reinstate economic support measures if conditions deteriorated. The market continued to grow strongly for most of the remainder of 2021.
Q: Why were Perth and Darwin slowing while Sydney and Hobart were still strong?
Perth and Darwin had led earlier recovery phases and were showing the natural signs of a market where the demand surge had run its course. The low ratio of sales to new listings in those cities confirmed that the frantic pace of absorption was easing. Sydney and Hobart were at different points in their cycles and still had strong underlying demand.
Q: What did the 13.5% annual growth rate mean for the average home value?
In dollar terms, a property worth $700,000 at the start of the financial year would have increased to around $794,500 by June 2021. For buyers who had been saving while prices rose, this illustrated why timing and pre-approval matter. Those who moved early in the cycle were better positioned than those who waited.