Australian house prices boom in 2021, bust in 2022

Knight Frank has released its Global House Price Index for Q4, with Australia taking the top spot as the country with the highest rate of annual price growth in 2021.

While global house prices increased by 10.3% in real terms on average in 2021, Australia’s recorded the highest rate of annual real price growth of 17.5%.

The top 20 nations for price growth in 2021 are shown below:

Top 20 nations for house price growth

Australia experienced the strongest real house price growth in the world in 2021, according to Knight Frank.

Knight Frank Australia’s Head of Residential Research, Michelle Ciesielski, tips that Australian house prices will rise up to 8% in 2022 on the back of supply shortages:

“With compounded savings throughout the pandemic in what is still a relatively low interest rate environment, the stability of residential property as safe haven continues to appeal and is one of the reasons why Australia has seen significant growth in values over the past year.

“We’ve now reached a point where the Australian housing market has become fatigued after riding significant growth in values on the back of an economic rebound, and is now be grappling again with global uncertainty, a natural disaster and an upcoming federal election.

“We can’t ignore the fact that we are facing a rental crisis in our cities and regional areas of Australia, with delayed construction in what has already been a diminishing pipeline of newly built homes, a lower number of local and international investors adding to the rental pool, and a likely increase in the skilled migrant population who also increase the demand for rental properties.

“So despite the economic headwinds on the horizon, the current imbalance between demand and supply in Australia’s mainstream residential markets for at least the next three years, could result in further growth in prices of up to 8% by the year’s end.”

I’m tipping prices nationally to begin falling from mid-year, driven by Sydney and Melbourne. Next year is also shaping up as a ‘bad year’ for Australian property, with interest rates likely to rise (albeit not by nearly as much as markets are predicting).

After the epic price boom of 2021, a correction was always inevitable.

Unconventional Economist

Comments

    • The Travelling PhantomMEMBER

      The correct term is “negative side ways movement”
      they’ll see the light when they start using the correct terminology

    • Strange EconomicsMEMBER

      In housing a correction means is when the RATE of increase per year drops by1%,
      so next years correction will be only 16% price growth, quite feasible in the delusory world of Aussie house prices.

  1. turvilleMEMBER

    I note the Ukraine was 16th on that list !! Guess they’ve dropped off comprehensively

    • Strange EconomicsMEMBER

      Tax the Air BNBs double, they are a big part of the rental shortage.
      Thats if they actually declare them at all to tax.