The typical Australian home owner has become $131,236 richer on paper over the past year, and there are few signs so far in 2022 that the COVID pandemic real estate boom is about to end.
CoreLogic's latest home value data show prices jumped by 22.4 per cent over the past year, the biggest increase since June 1989.
However, CoreLogic's research director, Tim Lawless, said the biggest part of that price increase had occurred in the first part of 2021.
"The early indication is that housing markets are starting 2022 with a similar trend to what we saw through late last year," he said.
"Values are still broadly rising, but nowhere near as fast as they were in early 2021."
However, the 1.1 per cent increase in January, if maintained throughout the year, would still see a 13 per cent-plus increase in prices annually.
'Pretty disheartening' for first home buyers
Mr Lawless said the future direction of the market would be in large part dependent on the selling intentions of current owners.
Melbourne is the only capital city where sales listings are currently (slightly) above their five-year average, while Sydney's are 12 per cent below.
However, the number of properties for sale in the other capital cities is well below typical levels, only about half in Brisbane and Adelaide.
"The trends in advertised supply levels go a long way towards explaining the performance of housing values," Mr Lawless explained.
"The situation in Adelaide and Brisbane is very different; supply remains tight and buyer competition is a key factor supporting the upwards pressure on prices."
Brisbane and Adelaide were the clear stand-out capital cities for price increases over January (2.3 and 2.2 per cent respectively), with Brisbane also leading housing inflation over the past year (29.2 per cent).
Tarryn Hendry and her partner know this all too well.
They have been trying to get into the Brisbane property market for more than a year.
"It's been pretty disheartening, going to many auctions and open homes and just feeling like we're just not in the right price range, even though we thought we were," she said.
Ms Hendry and her partner sought a revised pre-approval last week and were told they could borrow $1.2 million.
"We had no intention of spending that much money on our first property, because we wanted to be able to comfortably service it," she said.
"Ideally, we wanted something between $650,000 and $750,000."
However, with prices rapidly increasing, Ms Hendry said that budget has had to go by the wayside.
"We've had to consider going $750,000 to $950,000 because that's the market now."
Ms Hendry is hoping possible interest rate rises later this year might work in their favour.
Regional real estate demand stays hot
Regional areas also continued to outperform the average capital city home, with prices up 1.8 per cent last month and 6.3 per cent over the past three — more than twice the quarterly price increase seen in the big cities.
CoreLogic said the most popular regional markets over the past year had been those with lifestyle attractions that were also within at least occasional commuting distance of major cities, such as the Southern Highlands and Shoalhaven (up 37.6 per cent) and Hunter Valley (up 34 per cent) outside Sydney, and Sunshine Coast in south-east Queensland (up 34.4 per cent).
Real estate agent Cooper Askew says the market has cooled where he is selling homes at Shell Cove, about an hour-and-a-half drive south of Sydney, but it is still in high gear.
"We like to say we've gone from 150 kilometres [an hour] on the highway to 120 kilometres," he said.
"It is quite a strong market with a lot of buyer demand."
He said the market conditions were making it particularly difficult for first home buyers.
"In terms of the supply that we can offer these buyers, it's extremely limited," Mr Askew explained.
Houses outperform apartments
The pandemic preference for standalone houses over units has also continued, with house values up 1.3 per cent last month, compared to a much more modest 0.3 per cent rise for apartments.
CoreLogic said this had seen the gap between median house and unit prices rise to a record level of 28.3 per cent, which it said might result in demand gradually switching back towards medium and high-density living.
First home buyer Josiane Eid is one of those who, by necessity, has opted for an apartment to break into the property market.
She put down a deposit for an apartment off the plan on the outskirts of south-west Sydney late last year.
"I paid around the $580,000 mark for this property, and I personally feel it was great value considering the area of Oran Park," she said.
Her property is due for completion in April and Ms Eid will then need to go to the bank to finance her mortgage.
"I'm hoping to get a good interest rate by the time the apartment is registered with strata because, at the moment, I don't really know my interest rates. So I'm hoping that it's still going to stay low," she said.
However, Ms Eid is not concerned about whether increasing interest rates might impact her ability to repay her loan.
"I think it's pretty set in stone considering I'm still in the same job. So my borrowing capacity is going to stay the same," she added.
However, while she has started with a unit, Ms Eid hopes to upgrade to a house with land in the future.
"If this house gets me quite a lot of equity, and hopefully it does, I'm planning on, at the end of this year or early next year, purchasing another property," she said.
"But an apartment was a great foot in the door. It's a great stepping stone for me."
