Covid property boom impact still in play

Scott Kuru March 17, 2025 5 min read

Image from TheDailyTelegraph

KEY POINTS

Australian home values have surged nearly 40% since March 2020, adding about $227,000 to the median price, outpacing wage growth and worsening affordability
Mid-sized capital cities like Perth, Adelaide and Brisbane have seen the biggest value increases, while house prices grew more than twice as fast as unit prices
Rents have also risen dramatically by nearly 38% in the last 5 years, far outpacing the previous five-year trend, and pushing national median weekly rents up by $177

A new analysis of trends over the past five years has found the impact of the Covid-19 pandemic is still being felt in the housing market.

The CoreLogic research says one of the most significant factors five years on from March 2020 is how housing values have substantially increased.

Nationally, home values have risen by a cumulative 38.4%, according to the data analytics company’s calculations, adding approximately $227,000 to the median value of an Australian dwelling.

An overview

On the 11th of March 2020, the World Health Organisation declared COVID-19 as a global pandemic.

To mark the fifth anniversary of this event, CoreLogic’s Research Director Tim Lawless has penned a piece of analysis looking at how the Australian residential property market has changed since then.

“Although the onset of the pandemic is now five years behind us, the influence on housing markets is still being felt,” he says.

Mr Lawless says the big 38.4% lift in dwelling values since the 11th of March 2020 has been a mixed blessing.

“While such a substantial rise in housing values has probably been welcomed by homeowners, the downside has been felt in a worsening of affordability metrics,” he says.

“Australian wages have risen by less than half the increase of housing since the onset of COVID.

“For some context, the previous five-year period saw national home values rise by a much smaller 20.6%, and the five years before that the market was up just 14.7%,” he says.

As another point of comparison, between the 11th of March 2020 and the 11th of March 2025, the Australian stock market’s benchmark index, the S&P 200, gained 37.8%.

The S&P 200 closed at 7890.10 on the 11th of March this year, but has traded in a wide range over the past five years, falling as low as 4816.20 on the 20th of March 2020 and spiking as high as 8555.80 on the 14th of February this year.

Growth not even

While nowhere near as volatile as the stock market's rollercoaster ride, Tim Lawless points out that Australian residential property’s growth path has been far from straightforward.

First, there was a drop during the early months of the pandemic, with CoreLogic’s national home value index falling 1.7%, due to “the initial shock of a global pandemic…accompanied by border closures, social distancing measures and a sharp drop in consumer confidence.”

Interestingly, the largest surge in national home values occurred between July 2020 and April 2022, with a jump of 33.1%, largely during the period when Australia’s international borders were closed.

“Such a rapid rate of home value growth occurred despite the absence of overseas migration,” Tim Lawless says.

“However, with significant shifts in internal migration, a drop in the average household size amplified housing demand, interest rates fell to emergency lows and a record amount of fiscal spending supported households and consumer confidence.”

After that, the housing market moved through what Tim Lawless calls “an interlude”, as interest rates started to rise.

That saw “a short but sharp decline of 7.5% over the nine months as interest rates rocketed from record lows, sentiment plunged, and serviceability constraints bit into demand.”

Then a second wave of growth arrived in February 2023, which saw home values soar by 14.5% to the end of October 2024.

“This second wave of growth occurred despite high interest rates, low sentiment and affordability challenges, and very low supply,” Mr Lawless notes.

More recent data shows housing values levelling off, “as the market adjusts to normalising population growth, affordability challenges and what is likely to be a gradual and cautious rate-cutting cycle,” he says.

“Different strokes”

Then there are differing growth patterns between dwelling types and capital cities.

The CoreLogic analysis points out that values for freestanding houses have recorded more than double the growth of unit values, with national house values up 44.5% compared with a 20.1% gain in units during the 5-year period.

Mr Lawless says each of the capitals has also shown a different trend “due to demographic flows, local economic conditions, housing affordability, investment demand, policy settings and housing supply levels.”

The mid-sized capital cities of Perth, Brisbane and Adelaide have dominated the growth picture.

“Perth topped the growth tables with a stunning 75.9% surge in housing values since March 2020, adding roughly $348,519 to the median dwelling value,” Tim Lawless says.

However, he points out that the WA capital entered this growth cycle “from a relatively weak and very affordable housing position, with the five years prior to March 2020 recording an 11.8% drop in dwelling values.”

Not far behind Perth was Adelaide, which has recorded the second-highest rise in values (73.1% of approximately $347,092) across the capitals during the 5 years since March 2020.

“Similar to Perth,” Mr Lawless says, “Adelaide came into the cycle from a generally soft run of growth” with dwelling values rising by just 11.1% in the previous five years.

“Adjusting for local incomes, Adelaide is now amongst the most unaffordable capitals, with the second-highest unaffordability metrics after Sydney,” he says.

As for Brisbane, values have jumped 68.7% since March 2020.

“In approximate dollar terms, Brisbane has led the cumulative gain since the onset of COVID-19, with $364,305 added to the median value, the largest dollar value gain across the capitals, despite Perth and Adelaide recording a higher percentage gain,” Mr Lawless says.

He also points out that Brisbane has overtaken Melbourne and Canberra to record the second-highest median dwelling value of any capital city, after Sydney.

While the mid-sized capitals have dominated the pandemic growth trend, Tim Lawless says it is clear these markets are now losing momentum.

“CoreLogic’s February home value index update showed the strongest monthly gains were in Melbourne and Hobart with a 0.4% rise.

“These are also two cities where housing values have recorded more material declines from their respective highs, with Hobart values 11.9% below peak levels in February 2025 and Melbourne values down 6.4%,” he says.

“The silver lining to this weakness has been an improvement in housing affordability that should help to support housing demand going forward.

“Even Sydney, where housing is generally most unaffordable, recorded a rise in values in February, with the largest gains driven by the premium sector of the market.”

Rents

CoreLogic’s Tim Lawless points out that rental markets have also been through a period of significant growth since the onset of Covid-19, with CoreLogic’s national rental index rising by 37.6% since March 2020.

That’s 5.8 times faster than the change in rents over the previous five-year period (6.5%).

The national median rental rate is now $177 a week higher than in March 2020.

Going forward, Mr Lawless sees a trend of rental growth slowing “as affordability challenges become more substantial for renters, the average household size gradually rises and overseas migration normalises.”