Real estate prices are rising at record speed in US, UK and Australia, as WFH and the pandemic pushed families out of big cities in 2021 – are new homes still a good investment?

Feb 3 , 2022

Australia, the US and the UK all saw double-digit growth in house prices last year as city-dwellers cashed in on property such as these waterfront apartments along the Yarra River in Melbourne, to move to quieter, more rural surroundings. Photo: Getty

In the US, home prices increased 18 per cent in the year to November, led by the likes of Arizona, Florida and Idaho while in New York they gained just 7.6 per cent

Sydney and Melbourne saw an exodus while Queensland’s prices leapt by more than 30 per cent, a pattern repeated in Britain with London seeing lower growth than rural areas

For those building wealth through property investment, 2021 was a good year, with record-breaking price gains in certain markets. On the other hand, would-be buyers watched in dismay as prices outpaced their savings, pushing the dream of home ownership further away.

In Australia, Queensland saw huge gains

Taking the cake for all-round gains was Australia, where home prices finished the year 23.4 per cent higher than at the start – the highest jump in two decades, according to the Real Estate Institute of Australia (REIA).

REIA president Adrian Kelly said this is the first time since June 2002 the annual increase has been above 20 per cent.

Houses in inner Sydney, New South Wales, Australia. Photo: EPA-EFE

“At A$1,499,126 [HK$8.4 million], Sydney’s median house price continues to be the highest among the [state] capital cities, 55.9 per cent higher than the national average,” he said. Perth’s median, at A$520,000, is the lowest, coming in 45.9 per cent below the national average.

Price records were smashed despite a sharp slowdown experienced in both Melbourne and Sydney as the year drew to a close. In December, Melbourne house prices fell by 0.1 per cent – the first month-on-month fall since October 2020, according to CoreLogic – while Sydney had a small increase of just 0.3 per cent.

Tim Lawless, CoreLogic’s research director, cites a surge in new listings through December for taking some heat out of the Melbourne and Sydney housing markets, along with demand headwinds caused by significant affordability constraints.

“We have seen this trend in previous growth cycles, where more expensive housing markets have shown greater levels of volatility. Housing values tend to rise more through the upswing but record a larger decline through the down phase of the cycle,” he said.

It’s a different story in Queensland, where pandemic-related interstate migration pushed prices on the Sunshine Coast up by 33.7 per cent, and as much as 38 per cent in some Gold Coast suburbs.

The Crown Resorts Ltd Barangaroo South luxury hotel resort and One Barangaroo Crown residences development, seen centre left, overlooking Sydney harbour, in February 2021. Photo: Bloomberg

Indeed, regional markets including Queensland’s Gold and Sunshine coasts outperformed all state capitals, led by the Southern Highlands and Shoalhaven in New South Wales, where home values soared by 37.7 per cent.