Australian capitals see strongest house price growth on record

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Residential property prices in Australia’s eight capital cities have seen one of their strongest increases on record over the past year. So how much would a mortgage on an average property cost now?

According to the latest figures from the Australian Bureau of Statistics (ABS), residential property prices rose 23.7% in the year to the December quarter of 2021; the strongest annual growth since the start of the Residential Property Price Index series in the September 2003 quarter.

In 2021, five of Australia’s capital cities experienced their highest annual house price increases on record: Hobart (+29.8%), Canberra (+28.8%), Brisbane (+27.8%) , Sydney (+26.7%) , and Adelaide (+23.9%).

Looking only at the December 2021 quarter, residential property prices increased by 4.7% in the eight capitals. The strongest quarterly price growth was recorded in Brisbane (+9.6%), followed by Adelaide (+6.8%), Hobart (+6.5%) and Canberra (+6.4%).

In dollar terms, the total value of Australia’s 10.8 million residential homes increased by $512.6 billion to $9,901.6 billion in the December 2021 quarter, resulting in an average home price $920,100 residential; compared to $876,100 in the September 2021 quarter.

So based on these figures, how much could a home owner expect to pay for a mortgage on a property in one of Australia’s eight capital cities?

To purchase a property for $920,100, a borrower would first need to have saved a 20% deposit of $184,020 and borrow the remaining $736,080. It would also be possible to apply for a mortgage with a deposit of 10% ($92,010) or even 5% ($46,005) of the value of the property, but this would also require adding the lender’s mortgage insurance ( LMI) at initial costs, or obtain support from a guarantor or government support program.

Assuming a homeowner pays monthly principal and interest at a variable rate of 2.52% (the average rate for new loans in January 2022 according to the RBA) over a 30-year term, loan costs can be distribute as follows:

To pay

Amount of the loan

Monthly repayment

Total interest

Total loan cost

Total amount paid (including deposit)

$184,020 (20%) $736,080 $2916 $313,704 $1,049,784 $1,233,804
$92,010 (10%) $828,090 $3281 $352,917 $1,181,007 $1,273,017
$46,005 (5%) $874,095 $3463 $372,523 $1,246,618 $1,292,623

Source: MoneySmart. Does not include fees or other charges (including IMT fees) and assumes the interest rate will remain the same for the life of the loan. This example is for illustrative purposes only.

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