REA Group's PropTrack analysis reported that Australia's capital city house price grew 22% over the past year when adjusted for inflation. 

This rate of growth has only been matched two times in history - in the 1950s (when prices grew 111% following the end of wartime price controls) and 1980s (29% growth amid financial deregulation). 

Paul Ryan, PropTrack Economist, said that house price growth is a 'modern phenomenon', citing that house prices shot up following the initial uncertainty of the COVID-19 pandemic.

"Exceptionally low borrowing costs, as well as the ability for more people to work from home, have driven price increases across the country, putting particular pressure on regional areas," Mr Ryan said.

"While the previous historical episodes of very strong price growth have both been followed by price falls, it is hard to see the same downturns befalling the current market, at least in the near-term."

In the 1950s, 'wartime powers' brought rents and house prices under control of the government, but after the second world war, this control was repealed.

Without it, prices doubled which led to the biggest house price increase in Australia's history.

Additionally, in the 1980s, the removal of limits on interest rates for loans, 'floating' of the Australian dollar, and new competition from foreign banks 'significantly modernised' the sector.

This created improved access to credit and helped facilitate the housing boom of 1989.

However, rapid price growth culminated in a financial crisis, which weighed on house prices in the following years, according to REA Group.

"The outlook for price growth in the coming period appears solid, if unlikely to be as exceptional as we’ve seen over the past year," Mr Ryan said.

"While the large number of property listings, particularly in Sydney and Melbourne as they come out of the most recent lockdowns, may put some downward pressure on prices, there remains a very high number of buyers in the market on realestate.com.au waiting to find their new home.

"APRA has implemented some tightening of credit conditions, but overall borrowing conditions remain very favourable, and the RBA reaffirmed its expectations that interest rates would not rise for another two years, at least."

'Strong' spring selling conditions expected to continue into summer

Sellers remain 'optimistic' the market results over spring will continue into the summer selling season according to Domain's latest property report.

The report provided specific areas across five capital cities - Sydney, Melbourne, Brisbane, Adelaide, and Perth - that had the highest weekly lift in new listings over the past week.

  • Sydney: Hawkesbury; Richmond - Windsor; Botany; Dural - Wisemans Ferry; Pittwater
  • Melbourne: Darebin - South; Manningham - East; Monash; Stonnington - East; Essendon
  • Brisbane: Redcliffe; Narangba - Burpengary; Capalaba
  • Adelaide: Prospect - Walkerville; Port Adelaide - East; Adelaide City; Marion; Mitcham
  • Perth: Swan; Cottesloe - Claremont; Bayswater - Bassendean; Mandurah; Kalamunda

Domain's findings revealed an ongoing rise in the number of new residential listings across Sydney (up 3%); Melbourne (up 3%); and Brisbane (up 2%).

This should give more choice to buyers as there is less competition in the market, according to Domain.

Perth listings are down by 8% and Adelaide is down by 3% when compared to last week, however, these cities are coming off 'record' levels from the week prior.

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Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

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