Comparing house prices from 2016 to 2021

The average Australian property buyer would paid almost $150,000 less if they were in a position to buy five years ago, in just another example of the incredible rise in prices this year.

CoreLogic data analysis from five years ago reveals startling increases in the median values of properties in Australia’s capital cities, where the middle-priced home has grown in some cities by more than $200,000.

In March 2016 the median value – which includes both apartments and free-standing homes – of an Aussie capital city property was $550,000.

Fast forward five years and that same hypothetical property is worth $693,936 – an increase of $143,936 or a jump of 26.17 per cent.

The rise in property prices has been so sudden it has largely outpaced the cost of Lender’s Mortgage Insurance (or LMI), which applies on deposits of less than 20 per cent.

The amount of LMI a buyer pays on a loan varies on the size of the loan, how much deposit you have, what the property is worth and a whole host of other factors.

But of course, a higher deposit means paying off a smaller mortgage in the long run.

According to Genworth’s LMI calculator, if a first-home buyer had a 5 per cent deposit on a $550,000 home, they would be facing an upfront LMI premium of more than $23,000 on a 36-to-40-year loan.

Of course this hypothetical does not factor in today’s historically low interest rates – or average wages in 2016 – it simply weighs up median prices now compared to five years ago.

When broken down by capital city, a more stark contrast can be seen where buyers are desperate to enter the market.

In 2016, the median value of a property in Hobart was the cheapest in the country at $341,500. Today, that median has slid up to an eye-watering $548,686 – a rise of just over 60 per cent.

In Australia’s most expensive market in Sydney, the median price of all properties was $730,000. Today that figure closes in on the million-dollar-mark at $928,028.

According to Domain’s Senior Research Analyst Dr Nicola Powell – who today released independent figures showing an equally stratospheric price rise – the hike in prices comes amid a perfect storm for buyers and sellers.

“Record low interest rates, improved household savings, low listing volumes, post-lockdown lifestyle changes, consumer sentiment roaring to an 11-year high, returning cashed-up expats and government incentives have fuelled demand for housing and a strong market performance,” Dr Powell said.

“It is the first time in a year that price growth across the combined capital cities has outperformed regional areas.”

Ms Powell said in Sydney, specifically, first-home buyers are watching prices outpace their ability to earn more income at work.

“For homeowners, this is the fastest rate of capital growth on record. Although prices are accelerating faster at the upper end followed by the mid-point of the market, the cost of upsizing remains a hurdle,” Dr Powell said.

“For first-home buyers, low mortgage rates have improved the affordability of repayments, but saving for a deposit is a challenge due to rapidly rising prices, low wages growth and low interest on savings.”

PROPERTY PRICES FIVE YEARS AGO

CoreLogic March Home Value Index 2016

CoreLogic March Home Value Index 2021

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