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Chief Economist Update: Global house price trends in 2020

Despite the challenges of a pandemic, house price rises were relatively consistent globally in 2020 and, in some cases, were stronger year-on-year.

The main trend we saw across many housing markets was weak tenant demand driving down rents, but cheap finance and high savings rates driving up values.

eastern suburbs sydney

Cheap finance and high savings rates have driven up housing values during the pandemic. Picture: Getty

We also saw high levels of government stimulus, with subsidies for new homes creating very high levels of building activity.

Beyond that there were some unique dynamics in different countries.

United States

In the US, the International Monetary Fund recently found that it was very cheap and very expensive homes that did well.

A study into housing demand during 2020 found that the increase in demand was most pronounced at very low and very high incomes. The flow-on impact to property meant lower-priced and higher-priced properties did well. 


While we can’t undertake such an analysis with Australian data, we can look at the performance of median price growth of suburbs across a variety of price points.

At a national level, there is a clear difference between the impact on units and houses in 2020. While only about 15% of capital city suburbs saw median prices decline for houses, that figure more than doubled for units.

The unit market was impacted by foreign students not returning, young people (the majority of renters) being hit harder by unemployment, the six-month ban on evictions affecting investor income (the majority of apartments are rented), and lifestyle changes. Aussies started looking for more space and were no longer so constrained by where they lived due to changed work conditions. 

By price point, we can see that like the US, expensive properties did well during the pandemic, but, in contrast, cheap properties performed poorly.

Vaucluse waterfront estate

Expensive properties did well during the pandemic, in contrast to cheap properties. Picture:

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In particular, while only 16% of suburbs nationally saw price declines for houses, this proportion increased to 26% for suburbs with medians priced under $500,000.

A similar dynamic played out for units. While 32% of suburbs saw unit price declines, this proportion increased to 38% for units priced under $500,000.

It might be that lower income earners did access cheap finance and just chose to upgrade – slightly more expensive suburbs, priced between $500,000 and $750,000, did pretty well during 2020. However, a number of factors likely contributed to the poor performance of affordable suburbs.

This first is that unemployment was more prevalent for lower-income jobs that couldn’t be done from home, making it hard for people to pay loans or take advantage of cheap credit conditions.

For the apartment market, cheaper apartments that would generally be rented by students and younger people were hit harder due to the increased prevalence of unemployment, as well as students not returning or leaving to live with families.

The most active groups of buyers at cheaper price points are investors and first-home buyers, and investors were very quiet in 2020.

First-home buyers were very active, but also had very high levels of government incentives available to them, which perhaps allowed them to buy at more expensive price points than they otherwise would have. 

Apartments Melbourne

Lower-priced properties did better than expensive properties in Melbourne. Picture:

Across capital cities, the trend was consistent with the exception of Melbourne, which showed exactly the opposite conditions. Lower-priced properties did far better than expensive properties.

This was likely sentiment driven given the prolonged lockdown. What is also likely is that now Melbourne is out of lockdown and the economy is firing again, it will start to exhibit more consistent conditions to the rest of Australia in 2021.

Record wheat exports for Australia in 2020 

Australia’s iron ore industry had a particularly good year with both record prices and record exports. These strong conditions had flow-on positive impacts to house prices and rents in areas located close to mines, as well as in Perth.

While iron ore was the standout export story for 2020, cereal exports also had a phenomenal year, hitting a record level, and it was wheat that drove the increase. Like iron ore, we have never exported so much wheat.

Wheat field, WA

Australia has never exported so much wheat. Picture:

Pricing has also been pretty good, although certainly nowhere near record.

Russia, our main competitor for wheat, has had bad weather, very high levels of COVID-19 infections and this year is increasing its wheat export tax.

In Australia, the drought has broken and we have had very few COVID-19 cases. 

There has been a two-fold increase for property. The first is very strong demand for commercial farms. On, this sector saw one of the biggest jumps in enquiry in 2020.

The increasing interest from large-scale institutional investors also led to some high prices being paid for some of our most expensive farms.

The biggest purchaser was Canada’s Public Sector Pension Investment Board, spending more than $1 billion on rural properties last year. Their biggest purchase last year was for Webster Limited, one of our biggest landholders. second impact has been on wheat farming towns, which are seeing decent conditions. The Western Australian Wheatbelt has seen one of the biggest declines in population long term but is now seeing very strong price growth of almost 10%, which suggests that when updated population estimates are released, there will be more positive data on growth.

The town with the strongest price growth in this region is Merredin where 40% of WA’s wheat is produced. 

While wheat exports have been at record levels, this is unlikely to remain the case in 2021. With the global rollout of a COVID-19 vaccine, in addition to more favourable weather conditions in Russia, it is looking like production elsewhere in the world will be positive.

Grains futures markets are certainly pricing this in and last week there was a sharp fall of almost $20 a tonne from the previous week. 

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