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House prices grew at the fastest rate in 20 years

Australian house prices increased 25.1 per cent in 2021, making it the fastest annual growth rate in 20 years, according to new data.

The latest Real Estate Institute of Australia (REIA) Real Estate Market Facts found the surge in property prices last year was the first time since June 2002 that the annual increase had been higher than 20 per cent.

REIA President, Hayden Groves, said the median house price for the eight capital cities jumped to $1,021,710 – the highest on record.

“Over the quarter, the median house price increased in all capital cities except Darwin,” Mr Groves said.

“At $1,601,467, Sydney’s quarterly median house price continues to be the highest amongst the capital cities, 56.7 per cent higher than the national average.

“At $525,000, my home town of Perth remains the most affordable with the lowest median house price across Australian capital cities, 48.6 per cent lower than the national average.

“With Western Australia finally opening the borders it will be interesting to watch how this impacts on property prices.”

Mr Groves said while house price growth has been strong, other dwelling types haven’t seen such a sharp rise.

“The weighted average median price for other dwellings, such as villas and flats, for the eight capital cities increased to $658,577 – a quarterly increase of 1.8 per cent,” he said.

“Over the quarter, the median price for other dwellings increased in Sydney, Melbourne, Brisbane, Perth and Hobart but declined in Adelaide, Canberra and Darwin.

“At $802,255, Sydney’s median price for other dwellings continues to be the highest amongst the capital cities, 21.8 per cent higher than the national average. 

“At $412,500, Adelaide has the lowest median price for other dwellings across Australian capital cities, 38.2 per cent lower than the national average.”

Mr Groves noted 2021 also saw a sharp jump in median rent.

“Over the December quarter, the weighted average median rent for three-bedroom houses in the eight capital cities increased to $471 per week, a quarterly increase of 1.5 per cent.

“The median rent for three-bedroom houses increased in all capital cities except Sydney, where it remained stable and Darwin where it decreased by 3.7 per cent.

“During the quarter, the weighted average median rent for two-bedroom other dwellings increased to $435 a week. 

“The median rent increased in all capital cities except in Sydney, where it remained stable and Darwin where it decreased 0.5 per cent.”

Mr Groves said investor and regional activity remained strong with property appearing to be a ‘go-to’ investment as uncertainty around the world inched higher than ever before.

“Regional markets have generally enjoyed a period of sustained growth with key centres like Wollongong (30.4 per cent), Launceston (49.3 per cent), Sunshine Coast (32.9 per cent) and Mt Gambier (14.9 per cent) recording large annual increases,” he said.

“Household investor finance increased by 13.4 per cent in the December quarter with investors continuing to enter the market confidently in this phase of the COVID-19 pandemic.”

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.