- Combined capital house prices have recovered roughly half of the losses made during the 2022 housing downturn.
- Sydney has been rebounding the strongest, up two-thirds from the lows.
- The recovery might not last as challenges remain.
Australia’s property market recovery is well underway, as house prices regain roughly half of the losses made during last year’s housing downturn.
Domain‘s House Price Report for the June quarter found that housing values have recovered 3.4% of the 5.6% decline that started when the Reserve Bank of Australia (RBA) started lifting interest rates.
After Australian house prices bottomed out in December 2022, capital city house prices have risen almost four times faster than the previous quarter to produce the fastest gain since late 2021, during the peak of the Covid housing boom.
Units have also continued a sharp recovery as well, with values up nearly 50%, having risen 2.6% after falling 5.4% during the 2022-23 downturn.
Sydney remains the strongest market in the country, with prices up more than 66% from the lows, after being the hardest hit during the downturn.
All capital cities across the country have moved into recovery mode, with the exception of Canberra which has seen their price falls start to flatten out.
Change in prices this cycle
| Region | Price peak | Price trough | Downturn, percentage | Downturn, dollar | Recovery, percentage | Recovery, dollar |
| Combined capitals | Mar 22 | Dec-22 | -5.6% | -$59,720 | 3.4% | $34,889 |
| Sydney | Mar-22 | Dec-22 | -9.5% | -$150,761 | 6.7% | $96,629 |
| Melbourne | Dec-21 | Mar-23 | -6.5% | -$70,862 | 0.4% | $4,241 |
| Brisbane | Jun-22 | Dec-22 | -5.5% | -$47,433 | 1.7% | $13,456 |
| Adelaide | Jun-23 | At peak | ||||
| Perth | Jun-23 | At peak | ||||
| Canberra | Jun-22 | Mar-23 | -11.9% | -$140,316 | 0% | $0 |
| Darwin | Sep-21* | Sep-22 | -3.7% | -$23,891 | 2.2% | $13,542 |
| Hobart | Mar-22 | Mar-23 | -8.3% | -$63,782 | 1.2% | $8,730 |
Source: Domain.
Tight stock boosting prices
Domain’s Chief of Research and Economics, Dr Nicola Powell, said the tight supply of new stock has been one of the key reasons for the turnaround in prices.
“The continued mismatch between supply and demand has been a fundamental contributor to the price recovery currently being experienced in the Australian housing market,” said Powell.
“This has been fuelled by an unseasonably weak flow of new listings and rising demand – with the total number of homes for sale 22% below the five-year average for the combined capitals.”
“The tide is gradually changing, as the flow of new listings improves, likely spurred by the persistent pricing recovery or home owners selling due to the higher debt costs.”
Dr Nicola Powell, Domain’s Chief of Research and Economics
According to Powell, while stock levels have been tight with a low level of new listings, they are higher than some of the bigger declines that we’ve seen in the past.
“Some cities are seeing an improvement – in Sydney, Melbourne, Canberra and Darwin, new listings are higher than their five-year average.”
Total property listings – national
Sydney the standout
According to Domain, Sydney’s house prices have now recovered 6.7% of their 9.5% decline and have risen four times fast than the previous quarter.
At the same time, unit prices have also gained some traction and are increasing twice as fast as in the prior period.
In Melbourne, values have only just started to recover, increasing 0.4% after falling 6.5%. This is the first, increase Melbourne house prices have seen in 18 months.
Meanwhile, in Brisbane, values have recovered 1.7% after falling 5.5% during the downturn. This is the second quarter of growth for Brisbane and the steepest gain in months.
Adelaide continues to show why it is arguably the most impressive housing market in the country, with house prices hitting another record high level.
While unit prices have also continued to drift higher, with the sharpest quarterly increase the city has seen since 2007, and reversing the previous quarter’s decline.
In Perth, house prices also hit an all-time high, despite demand for units falling. The annual decline in unit prices is now the steepest in three-and-a-half years.
Canberra has been the weakest of all the housing markets and there are now some signs that prices are finding a bottom. After tumbling 11.9% prices have now stabilised last quarter, in good news for homeowners in the country’s capital after experiencing the sharpest downturn on record.
In Hobart, the housing market is starting to bounce back with prices increasing over the June quarter – the first quarterly increase since the start of 2022. Values declined 8.3% during the downturn and have now recovered 1.2%.
At the top end of the country, Darwin is also showing some strength, with house prices increasing 2.2% of the 3.7% fall.
Headwinds remain for prices
Powell said that while the rebound in prices has been impressive so far, there are a number of factors that could slow things down in the months ahead.
“As housing confidence improves, and as the mortgage cliff unravels, we could begin to see a slowdown in price growth as listings continue to rise, and those looking to buy have greater choice.”
