House price gains have continued to soften into the new year with multi-speed conditions emerging across the country as housing markets begin to deviate.
Across 2021, residential property prices surged by 22.2 per cent—the largest annual increase since 1989—fuelled by ultra-low interest rates, high household savings, government stimulus and low listings.
All capitals posted healthy yearly gains, but the markets have started to diverge, as poor affordability and a flood of listings dampened growth in Sydney and Melbourne, while the smaller and cheaper capitals have powered ahead.
Brisbane, which posted the strongest gains over the year, finished the year with a 27.4 per cent rise—the largest annual growth in 18 years.
The city’s house prices, in particular, climbed by a whopping 30.4 per cent or $253,292 over the year.
Sydney, the nation’s second strongest market, notched up a 25.3 per cent jump in dwelling values—the fastest yearly increase since 1988.
However, a surge in freshly advertised listings through December had been a key factor in removing some momentum in Sydney’s price growth, along with some demand headwinds caused by significant affordability constraints and negative interstate migration.
Adelaide, which surged by 7.2 per cent in the final quarter of the year, remains unhampered by affordability issues with advertised stock levels remaining low and demographic trends supporting housing demand.