- Australian house prices have experienced a rate of growth at 21.9%, the fastest on record
- Although house and unit price growth rates have been the fastest on record, quarterly growth is beginning to ease
- “We’re seeing the property market begin to cool down," said Domain chief of research and economics
Although house and unit price growth rates have been the fastest on record, quarterly growth is beginning to ease, indicating the peak pace of growth has passed and buyers may experience some relief, according to Domain’s September Quarter House Price Report.
Australian house prices have experienced a rate of growth at +21.9%, the fastest annual rate of growth on record, with median house prices at almost $1 million nationally.
Domain chief of research and economics Dr Nicola Powell said, “we’re seeing the property market begin to cool down with soaring house prices in the last year adding to ongoing affordability pressures affecting buyers participation in the market.
“As COVID-19 lockdowns and restrictions come to an end and the sustained high prices appeal to vendors, sellers are beginning to re-engage with the market, increasing supply which in turn offer greater choices for buyers.”
Domain chief of research and economics Dr Nicola Powell
According to the report, in September, house prices rose by 3.5% to a new record high of $994,579 and unit prices by 1% to another record of $609,642.
Dr Powell said, “(the data) reveals there has been an increase in the average home loan over the last year indicating that customers are borrowing more to keep up with rising prices and further driving house price growth. This may start to slow down as new serviceability measures are implemented from 1 November.
“However, the sheer affordability of keeping up with rapid house prices gains is proving a barrier for many buyers, especially first home buyers facing spiraling deposit goals and poor interest accrued on savings.”
Dr Powell said upsizing is also becoming a financial leap despite the benefit of strong equity growth, and particularly challenging if sold prior to purchasing.
Capital cities except Perth and Darwin hit new record high house prices.
Sydney, Melbourne, and Adelaide hit new record unit prices, with Hobart hailing first place.
- Sydney’s median house price rose to a new record of almost $1.5 million, with the fastest annual rate of growth on record at +30.4%
- Melbourne’s median house price rose to $1.038 million despite being in lockdown for most of the last quarter
- Canberra is now the second most expensive capital city to purchase a house (for the first time since 2005)
- Brisbane’s median house prices rose three times faster this quarter compared to last year, pushing the price gap between houses and units to an all-time high
- Darwin hit the highest annual house price growth in 17 years with an increase of +33.2%
- Hobart house prices have almost doubled over the past five years, the steepest increase of the capital cities
- Perth is now Australia’s most affordable capital city to buy a house and the only capital city to experience negative house price growth indicating a significant turning point in the market.
According to the report, Sydney house prices rose by roughly $6,700 a week over the past year with a total rise of just over $349,000 hitting a new record of almost $1.5 million.
This makes the rise the fastest annual rate of growth on record at 30.04%, however, its quarterly growth has continued to slip.
Unit prices hit a new record high of $802,475 after gaining $18,695 over the September quarter, surpassing the mid-2017 price peak for the first time.
Dr Powell said, “with significant disparity and gap between house and unit prices, Sydneysiders are seeing greater value in units due to house price affordability constraints, as well as rising investor activity supporting increased buyer demand and rising unit prices in the last quarter.”
Despite being in lockdown for most of the quarter and price growth being persistently lower than the combined capital cities, Melbourne house prices hit a new record high of $1.038 million after increasing by +16.8% in the past year.
According to the report, it’s the strongest annual gain in 11 years.
Dr Powell said. “Lengthy lockdowns continued to drive buyer preference to larger homes and more space. This has resulted in house prices growing almost three times faster than units over the past year, a divergence that has created a record price gap in Melbourne.”
Buyer demand in the Greater Brisbane property market remained strong as the number of homes sold reached its highest point in at least six years with median house prices hitting a new record high, passing the $700,000 mark.
The strong demand continues to see properties being snapped up quicker, with many areas unable to replenish sale stock quickly enough to keep up with demand.
The report found however, more sellers are starting to come to market with newly listed homes for sale 7% higher over the first three weeks of October compared to the two-year average which will need to continue to catch up to underlying demand.
Dr Powell said, “Brisbane’s offer of relative affordability compared to other major capital cities, the lifestyle, climate and winning the 2032 Olympics bid all provide key reasons for increased internal migration and investment activity.”
House prices hit an all-time high at $1.07 million, however, unit prices dropped by 2.9% over the last quarter as prices in the city have seen softer growth with buyers preferring houses.
According to the report, buyers continued to operate in a sellers’ market due to the heightened competition in securing a sale and exaggerated reduction in supply throughout lockdown weeks.
The auction market remained strong, extending its historic run of clearance rates above 80% for every month this year into recent lockdown months, hitting 89% in September, the highest monthly result for the year to date.
Dr Powell said, “Canberra’s soaring housing prices – reaching $1 million median house price – highlights the booming property market and strong demand present, likely to represent those buyers who had previously been unable to secure a home earlier in the year. In fact, total supply continued to shrink to a multi-year low in September.
“While all regions reached a new record high house price, price growth at the upper end of the market is starting to lose momentum, suggesting price acceleration will begin to ease and suggests the price growth peak has passed.”
The city has experienced the strongest annual price increase by +20.1% since 2008 with house prices hitting a record high at $667,888 and unit prices increasing over the quarter by +5% hitting another record high at $357,615.
Dr Powell said, “pressures still remain on buyers as demand outstrips supply and price growth remains positive. But there are signs conditions could be changing as house price growth moderates by one-third compared to last quarter.
“Buyer demand is no doubt still strong, but it is starting to ease as the number of home loans financed drops from their recent peak.”
There was an upward trajectory in house prices showing the strongest rate of annual house price growth in 17 years and the highest median price in six years reaching $640,068.
However, Darwin’s unit prices dropped by 1.2% in the September quarter.
Dr Powell said, “the turnaround has been driven by sharply rising buyer demand, as low-interest rates stimulate activity as well as higher household savings, returning expats and border restrictions that have helped to retain residents in Darwin.
“House prices have been the main beneficiary of escalating prices, and it would take only two more quarters of the same growth to achieve a new record high.”
House prices broke records getting close to the $700,000 mark for the first time, with unit prices at a record high $532,284 increasing by +23.8% since last year.
Dr Powell said, “the current upswing is now the strongest the city has seen in 17 years. All price points are rising by double-digits with entry-level prices recording the strongest rates of growth.”
“All Hobart regions have reached a new record house price in September.”
Dr Powell also said supply remains tights with new listings in September 1% below the five-year average as buyers continue to absorb new listings quicker than they are listed for sale.
Perth is the most affordable capital city to buy a house with property prices falling in September for the first time in two years with house prices at $598,601 and unit prices at $363,653.
According to the report, the quarterly decline in house prices signals buyers are becoming constrained by affordability and the fear of overpaying created by the intense buying conditions.
Dr Powell said, “new listings will need to continue to be strong to appease rising prices.”
“The number of Aussies relocating to Perth has reached its highest point in eight years and while there remains a positive inward flow into Perth, the look of easing is being replaced with higher investment activity.”