In a year that no one could have predicted, which encompassed everything from a deadly global pandemic to our largest economic downturn since the 1930s, CoreLogic’s Best of the Best 2020 Report reveals Australia’s $7.2 trillion residential real estate market proved remarkably resilient.
Released today, the annual Best of the Best report is a suburb level analysis of a variety of measures used by CoreLogic to determine property market performance across the year, ranging from property value growth and sales to rental yields.
So, where were Australia’s top performers in residential real estate over 2020?
Australia’s National Best Performers 2020
Eliza Owen, CoreLogic’s Head of Research Australia, said the Best of the Best report for 2020 highlights the resilience of luxury markets in Australia, where the highest median house value was once again in Darling Point, and the highest median unit value was found in Point Piper, as with 2019.
“This is not to say these suburbs have been unaffected by the pandemic; indeed the high end of the Sydney market is generally more volatile to changes in economic conditions,” Ms Owen said.
“However, this volatility also tends to see a rapid recovery in the wake of lower mortgage rates and an improvement in consumer sentiment.
“Perhaps even more surprising is that some of the suburbs more impacted by the pandemic are represented in this edition of the Best of the Best report as having the highest sales turnover value in the year to September,” she stated.
“In the suburb of Melbourne, for example, unit values declined -3.4 per cent between the onset of the pandemic in March, and the end of September.
“The total value of sales is down 3.9 per cent in the year to September 2020 compared with the year to 2019.
“Yet the suburb of Melbourne has gone from having the sixth highest total sales value in 2019, to claim the number one spot in 2020,” Ms Owen explained.
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2020 in review
While the initial shock of COVID-19 led to a 2.1 per cent decline in national property values between April and September, Australian housing values were 1.1 per cent higher over the year to November following a recovery trend in the last two months.
“Housing values have been supported by a strong mix of regulatory, monetary and fiscal measures, which have induced record-low mortgage rates, the deferment of mortgage repayment for households impacted by COVID-19, support for low income households, as well as grants and concessions for owner-occupier purchases,” Ms Owen said
Demand for lifestyle areas is also a trend that may have been exacerbated, but was not necessarily triggered, by COVID-19. The narrative of Australians fleeing capital cities in search of a sea-change or tree change “because of COVID” has dominated reporting on the housing market through 2020.
“The relative popularity of lifestyle markets is evident in our report, and regional Australia out-performed the combined capital cities market,” Ms Owen said.
“With the exception of the highest median value suburbs, our Best of the Best report is dominated by high performing regional areas across the country.
“Sunshine Beach on the Sunshine Coast has seen the highest annual capital growth in houses nationally, compared with 2019 when St Kilda in Melbourne saw the highest housing growth.
Alternatively, rental market performance has been highly disparate.
Ms Owen said COVID-19 has had a severe impact on select rental markets in Australia, with Greater Melbourne unit rents falling 7 per cent in the year to November 2020.
“Inner city rental markets of Sydney, Melbourne and to a lesser extent, Brisbane have been particularly impacted by the closure of international borders, where historically high demand from overseas migrants has been disrupted. Notably the vast majority of overseas arrivals to Australia are initially renters.
“However, there is a completely different dynamic in rental markets across Perth, Darwin, and other mining-related markets that has emerged.
“Following the long withdrawal of investor demand and several years of low new supply additions, rental markets are tightening.
“Across the suburb of South Hedland, which holds the position of highest rental yields for units across the country, rents have increased significantly over the year following a long correction post mining-boom.
“This is also reflected in the WA capital, where Perth rent values have increased a remarkable 8.2 per cent across dwellings over the year,” Ms Owen stated.
2021 Outlook
Looking ahead to 2021, Ms Owen commented on some expected trends.
“Record-low mortgage rates will likely be a significant tailwind for property values, and may place upward pressure on prices through 2021. Combined with a recovery in economic, some earlier factors considered a major risk to housing markets have been reduced, including the end of mortgage repayment deferrals.
“The inner-city Melbourne market is seeing greater risk in 2021, with an increase in listing stock weighing on a recovery in values. For example, modelled sales volumes for November estimate 4301 transactions took place across Melbourne, compared with 8054 new listings added to the market in the same period.
“This means there was around 0.5 sales for each new listing added. This is very different from conditions across other capital cities, where the November sales to new listings ratio averaged 1.2 sales for each new listing added.
“So despite Melbourne dwelling values joining a broad-based recovery trend in November, and values rising 0.7 per cent in the month, the disproportionate volume of stock to sales volumes may slow the rate of recovery across the city in 2021.
“Property investment activity is likely to increase across smaller capital cities such as Perth, where rent values rose a remarkable 8.2 per cent in the year to November.
In Hobart, where gross rent yields are 4.6 per cent across dwellings, the investor share of mortgage finance increased from a recent low of 16.4 per cent in August 2020, to 21.8 per cent in October across Tasmania.
“Institutional interventions will continue to shape the profile of property buyers, particularly as HomeBuilder is extended at a reduced rate into Q1 2021, and regulators monitor prudential lending standards.
“At June 2020, the housing debt to income ratio was 141.2, with housing debt accounting for most of Australian household debt. This poses an ongoing risk to the Australian economy, especially where heavily indebted households may be more likely to save rather than spend during periods of uncertainty or economic hardship.
“As a result, policy makers and regulators may watch for signs of rising household debt, or a decline in prudential lending standards that could lead to higher household debt. Higher LVR lending or higher loan to income ratios could be a trigger for macro-prudential intervention in 2021.
“Overall, the housing market outlook for 2021 is positive, given highly accommodative monetary and fiscal policy, signs of an economic recovery and many first home buyer incentives remaining in place through to early next year,” Ms Owen concluded.
NSW Top Performers 
VIC Top Performers
QLD Top Performers
SA Top Performers
WA Top Performers
TAS Top Performers
NT Top Performers
ACT Top Performers
The full Best of the Best report from CoreLogic can be downloaded here.
