House prices in Australia are up in the June Quarter, particularly for higher value homes.
House prices in Australia are up in the June Quarter, particularly for higher value homes. Image: Canva.
  • CoreLogic data reveals that average dwelling values in Australia rose by 2.8% in the June quarter.
  • Perth and Adelaide are the only capital cities that did not experience year-on-year declines in average dwelling values.
  • The best performing Australian capital cities in Q2 2023 were Sydney, Brisbane, Adelaide, and Perth.

Although down year-on-year after a blistering 2022, capital city house prices in Australia are showing signs of recovery from the lows experienced late in 2022, defying consistent RBA interest rate rises.

Data from CoreLogic reveals the good news for property owners in Sydney, Brisbane, Adelaide, and Perth. These population centres all showed increases in average dwelling values by more than 2% in the June quarter.

Pete Matthews, president of the Real Estate Institute of New South Wales (REINSW) said other factors are at play, particularly the number of properties on the market.

“I’ve never seen it in 33 years.

“We’ve got a rental market and a sales market which are both so savagely affected by a lack of stock.”

Pete Matthews, president, REINSW

Sydney, in particular, enjoyed hefty increases in dwelling values, the stratified hedonic index for the highest 75% of these increasing by a welcome 5.7%.

ABS finance data shows that property values could be on the rebound. Nerida Conisbee, chief economist at Ray White, pointed to broader economic trends as a reason to believe that the Q2 period of modest real estate price growth could indicate more sustainable retention in value.

“Interest rates are also close to peak, we may see a couple more increases but they are close to peak, and inflation is coming down,” said Conisbee.

“The thing that really drove prices down last year, which was the increase in the cost of finance, is unlikely to be such an issue over the next twelve months.”

Capital city house prices in Australia increase

The only Australian capital city that did not experience a quarterly increase in average dwelling values was Darwin, although pricier properties in both cities bucked the trend very slightly.

Over the 28 days ending 8 July, the combined capital city home values index was up 1.2% in Australia, with a fairly steady growth trajectory, suggesting the market was displaying resilience to the RBA’s most recent interest rate rise.

Property professionals are approaching the latest data with cautious optimism, suggesting that value figures such as these reflect many owners’ reluctance to sell in the face of property transfer costs and looming mortgage cliffs, meaning the full effect of interest rate rises may still be on the horizon.

“When you’re a homeowner, what are your options? You’ll hold on for as long as you possibly can and I don’t know that we’ve seen the full impact of the rate rises. That’s the resilience of Australian property owners, to hold on and suck up these rate rises.” 

Pete Matthews, president, REINSW

The Perth and Adelaide property markets have been the safest places in the country for owners when considering yearly price growth. Perth’s dwelling values have increased by 2.5% when compared to last year, while Adelaide’s values have remained flat.

House prices in Perth, Western Australia are still at record highs, increasing by 2.5 percent in the June quarter.
House prices in Perth, Western Australia are still at record highs, increasing by 2.5% in the June quarter. Image: Canva.

Property sales volumes down

Property sales are down slightly in June, with a six-month moving trend suggesting that sales volumes are stabilizing, despite the overall volume being less than the highs experienced in 2021.

There were approximately 35,523 property sales in June nationally, the five-year average for June is 39,180.

“I think it’s fair to say that nobody expected the market to improve this year compared to last. However, its basically been governed by a lack of stock.”

Pete Matthews, president, REINSW

Sales volumes are still quite a lot less than they were in 2022, particularly in Brisbane, Melbourne, and Sydney, all with more than 20% fewer properties being sold than at the same time last year.

Houses spending longer on market

Properties in Australia are taking an average of 34 days to sell, a slightly longer period than in Q1 2023, when they reached an average of 30 days on the market.

It took longer to sell property across all areas in Australia year-on-year compared to 2022. Property in regional areas took an average of 47 days to sell in the second quarter of 2023.

In capital cities, it took less than one month to sell houses and units on average, just 29 days.

The tight rental market in Australia

Last year rent increases peaked at an eye-watering 10.2%, putting the squeeze on tenants in a period of increasing grocery and utility bills.

A lack of state and federal incentives for potential landlords is also being cited as a reason for the rental squeeze.

“There are no new landlords who are rushing into the marketplace because there’s no incentive,” said Matthews.

“There is, in fact, less incentive for landlords to purchase new properties in an environment where you’ve got state and federal governments with no short or medium-term plan to increase the supply of housing.”

Pete Matthews, president, REINSW

The rate of rent rises is showing signs of easing very slightly, down to 9.7% as a yearly average, after increasing just 0.7% in June.

It is still much cheaper to rent a house in regional areas, and a comparatively modest increase in rent of 4.9% brought the national average down.

Capital city-based renters felt the heat in the year to date, spending an average of 11.5% more on rent.

“Obviously, affordability is impacting renters at the moment, we are seeing an increase in the number of people sharing,” said Conisbee.

“What we saw in the pandemic was a decrease in average household size, but now people are moving back in together, pretty much because rents are so expensive.”

Capital growth in home values reached 1.1%, outpacing the growth in rent values which increased just 0.7% in June nationally.

National gross rent yields were down on the previous month, but higher than they were a year ago.

Rents increased in Australia more than 10 percent in 2022 and are still increasing, but at a lower rate.
Rents increased in Australia by more than 10% in 2022 and are still increasing but at a lower rate. Image: Canva.

After a distinct peak in new finance commitments in the bygone era of record-low interest rates, i.e. much of 2021 and H1 2022, the value of new financial commitments fell significantly once the RBA started putting borrowers under more rate pressure.

But after a low in February, the combined value of secured housing finance experienced an unexpected 4.8% rise in May, bringing it to a value of almost $25 billion.

The uplift in borrowing after February lows can probably be attributed to a dip in house prices over the Q1 period.

The number of first-home buyers receiving finance increased by 5.5% in May.

25.4% of owner-occupier’s secured home finance for the month, an unexpected 1.6% more than the decade average of 23.8%.

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