Interest rate announcement – March 2021
The RBA last changed the cash rate in November last year, reducing it to an unprecedented low of 0.1%. This was an unprecedented move from the RBA which reveals that, while the economy has begun to bounce back, the path to full recovery from impacts of COVID-19 is likely to be extended well into next year at least. This month,  RBA left the rate on hold at this level and reaffirmed its commitment to continue to help support the economy through this recovery phase. 

Australian home values surged 2.1% higher in February; the largest month-on-month change in CoreLogic’s national home value index since August 2003. Spurred on by a combination of record low mortgage rates, improving economic conditions, government incentives and low advertised supply levels, Australia’s housing market is in the midst of a broad-based boom. Housing values are rising across each of the capital city and rest of state regions, demonstrating the diverse nature of this housing upswing.

According to CoreLogic’s research director, Tim Lawless, a synchronised growth phase like this hasn’t been seen in Australia for more than a decade. “The last time we saw a sustained period where every capital city and rest of state region was rising in value was mid-2009 through to early 2010, as post-GFC stimulus fuelled buyer demand.”

Table 1: Changes in Dwelling Values as at 28 February 2021

 MonthQuarterAnnualTotal ReturnMedian Value
Sydney2.5%3.6%2.8%5.3%$895,933
Melbourne2.1%3.5%-1.3%1.8%$717,767
Brisbane1.5%3.5%5.0%9.3%$535,618
Adelaide0.8%2.7%7.3%11.8%$478,587
Perth1.5%4.2%4.6%9.3%$491,795
Hobart2.5%4.8%8.7%14%$535,994
Darwin0.7%5.5%13.8%19.4%$438,645
Canberra1.9%3.7%9.7%14.6%$706,454
Combined capitals2.0%3.6%2.6%5.9%$675,014
Combined regional2.1%5.4%9.4%14.4%$438,185
National2.1%4%4%7.6%$598,884

Source: CoreLogic Hedonic Home Value Index, February 2021

Sydney and Melbourne were among the strongest performing markets, recording a 2.5% and 2.1% lift in home values over the month respectively, as Australia’s two largest cities caught up from weaker performance through 2020. The quarterly trend however, is still favouring the smaller cities; Darwin housing values rose 5.5% over the past three months, Hobart values rose 4.8% and Perth was up 4.2%.

Regional markets (up +2.1% over the month) have continued to show a higher rate of capital gain relative to the capital cities (up +2.0%), however the performance gap has narrowed compared with the earlier phase of the growth cycle. Regional areas generally recorded less of a decline in housing values through the worst of the COVID period last year, while also showing an earlier and stronger growth trend through the second half of last year. This regional preference is reflected in the annual growth trend, where the combined regionals index is 9.4% higher while the combined capital city index is up a much smaller 2.6%.

A housing market trend that has persisted through the COVID period to-date is the weaker performance of unit markets relative to detached housing. Across CoreLogic’s combined capitals index, house values (+4.4% over the past three months) have recorded a growth rate more than three times higher than that of its unit counterparts (+1.4%). There are some tentative signs this trend could become less obvious, with Sydney unit values recording their first month of growth since April last year and Melbourne unit values recording their largest gain since late 2019.

One of the factors driving housing prices higher is low advertised supply levels. CoreLogic’s most recent measure of total listing numbers continues to see advertised supply significantly below that of recent years. The number of properties advertised for sale nationally remained 26.2% below 2020 levels over the 28 days ending February 21.

Whilst available supply remains at historically low levels, the quarterly number of home sales is estimated to be up 35.3% on 2020 levels, with regional dwelling sales 40.6% higher compared with a 32.0% lift in capital city sales.

The past six months has seen CoreLogic’s estimate of settled house sales rise to be 17.9% above the decade average. Settled unit sales have also trended higher but remain slightly below the decade average (-0.8%) again reflecting the falling demand for higher density styles of properties.

Our Current Best Interest Rates

The best home loan rates we currently have available:

  • Variable rate of 2.19% pa (comparison rate: 2.34% pa)
  • 1 year fixed rate of 1.98% pa (comparison rate: 2.47% pa)
  • 2 year fixed rate of 1.89% pa (comparison rate: 2.94% pa)
  • 3 year fixed rate of 1.94% pa (comparison rate: 2.37% pa)
  • 4 year fixed rate of 1.94% pa (comparison rate: 3.21% pa)
  • 5 year fixed rate of 2.19% pa (comparison rate: 3.37% pa)

Assumptions: <$400,000 loan, owner-occupied purchase, principle & interest, LVR < 80%.

General Advice Warning: This article has been prepared for Harvest’s clients. The information contained herein is current and up to date at the time it was prepared. Harvest Property Loans Pty Ltd, ABN 63 147 743 244, ACL 392 260. Harvest reserves the right to correct any errors or omissions. Any advice contained herein has been prepared without taking into account any individual or company objectives, financial situation or needs. As such, before acting on any information contained herein, a person or company should consider whether the information is appropriate for them, having regard to their objectives, financial situation and needs. Rates quoted are subject to change at any time.