The COVID-19 pandemic has had a profound and lasting impact on the Australian property market, with effects still being felt five years after the initial outbreak. A key after-effect has been the unprecedented surge in home values nationwide. Nationally, home values rose by approximately 38.4% since March 2020, adding around $227,000 to the median dwelling value. This increase significantly outpaced wage growth, worsening housing affordability. In contrast, the five years prior to the pandemic saw a much smaller increase in national home values of 20.6%.
One of the most notable shifts was the rise of regional housing values relative to capital cities. Combined regional areas in Australia saw home values increase by about 56.3% since March 2020, compared to a 33.6% increase in capital cities during the same period. This was largely driven by strong internal migration rates as people sought more affordable housing and took advantage of remote working opportunities. Areas like Gympie and Byron Bay experienced particularly significant growth. However, this trend may be shifting as more workers return to the office.
Within the capital cities, there were also diverse growth patterns. Perth, Adelaide, and Brisbane experienced the highest rises in home values, with Brisbane leading in dollar terms, adding approximately $364,305 to the median value. Perth’s median dwelling value saw the biggest percentage growth, moving from the second lowest to a higher position among capital cities. In contrast, Melbourne saw the lowest growth rate among capital cities, at 8.4% since March 2020, attributed to longer lockdown periods and internal migration out of the city.
The rental market also experienced dramatic changes. Nationally, the rental index rose by 37.6% since March 2020, which is 5.8 times faster than the rental growth in the preceding five-year period. The national median rental rate is now $177 a week higher than pre-pandemic. This surge was driven by factors such as tight rental conditions and an undersupply of rental properties. However, there are predictions that rental growth may slow down as affordability challenges increase for renters and overseas migration normalizes.
Interestingly, the property market’s growth was not a straightforward upward trend. There was an initial drop in values during the early months of the pandemic, followed by a significant surge between July 2020 and April 2022, coinciding with international border closures. A second wave of growth occurred from February 2023 to October 2024, despite rising interest rates and affordability challenges, driven by low supply. More recently, the market has shown signs of levelling off as population growth normalizes and interest rate cut expectations emerge.
The COVID-19 pandemic has therefore reshaped the Australian property market in significant ways, leading to substantial increases in home values and rents, a notable shift towards regional areas, and varied performance across capital cities. While the immediate shock of the pandemic has passed, its after-effects continue to influence market dynamics and affordability.