Image – Canva
  • Capital cities show varied growth rates
  • Larger cities lead property recovery
  • Interest rates near peak, affecting sentiment

House prices across the capital cities have increased over the March quarter for the first time in a year, but the broad-based growth that we’ve seen in recent years has ended.

According to Domain‘s House Price Report, house prices in Sydney, Adelaide and Perth increased over the March quarter and stabilised in Melbourne and Brisbane.

Weaker conditions are evident in the smaller capital cities as house prices fell over the March quarter in Canberra, Darwin and Hobart.

Domain’s Chief of Research and Economics, Dr Nicola Powell said, “Australia’s housing market has now reverted back to a multi-speed one, meaning different markets are growing at different rates as they were pre-pandemic.”

“This provides opportunities for both buyers and sellers in different locations. The shift is being led by our larger capital cities which normally lead the property market recovery given that historically, they hit a peak price earlier and fall faster.”

In Sydney, Adelaide and Perth, house prices increased, while they remained stable in Melbourne and Brisbane. Weaker conditions were apparent in the smaller capital cities, as price falls accelerated in Canberra and Darwin.

Below average growth

Despite the rise, the pace of quarterly growth is currently a moderate 0.4% across the combined capitals compared to the historical average of 2.6%.

Dr Powell said, “Although lower listings are creating rising competition between buyers and helping to improve prices in certain markets, high-interest rates and tight serviceability requirements are still keeping many on the sidelines.”

“As prices lift in certain areas, it’s a timely reminder that interest rates are not the only factor influencing housing activity and prices.

Dr Nicola Powell, Domain’s Chief of Research and Economics

“Population growth is rebounding faster than anticipated, with record levels of overseas migration playing a driving role in our housing markets. Extremely tight rental markets are also making purchasing more attractive and may shift some to buy, given the current challenges of securing a lease.”

Dr Powell said that while the potential for further rate rises remains, inflation is slowing quicker than initially expected.

“This could have a positive sentiment flow on to consumers and the push needed for buyers and sellers to return to the housing market. Not only does it provide a more stable environment it suggests interest rates are at, or close, to a peak. Buyers have adjusted to this new norm of higher costs of debt and, as we reach the peak cash rate, it will provide them with a better understanding of borrowing capacity.”

Sydney

Dr Powell said Sydney’s house and unit prices might have bottomed out.

“Sydney’s housing market is rising again, with house and unit prices increasing over the March quarter. It is the first quarterly increase in a year for houses and the most substantial quarterly gain since late 2021 – a turnaround that follows three consecutive quarters of decline”

“Despite the rise, the current pace of quarterly growth of 1.3% is moderate compared to the historical average of 2.8%. However, it does suggest that Sydney house prices have passed a trough to end the steepest downturn the Sydney property market has ever seen. It is premium areas leading the price recovery – such as the eastern suburbs and city and inner-south.

“House prices remain 8.4% below the March 2022 peak, down about $134,000.”

Melbourne

According to Dr Powell, stable conditions persist in Melbourne’s housing market, suggesting house prices are currently at or close to the bottom of the price cycle.

“House prices nudged marginally lower over the March quarter to erase the nominal growth of the previous quarter. Despite the slight fluctuations, house prices have stabilised over the past six months, indicating balanced conditions between buyers and sellers. It is premium areas leading with a price recovery – such as the inner east and Mornington Peninsula.

“House prices are now 6.5% below the December 2021 peak, down by about $71,000 and back to mid-2021 pricing. However, they are a substantial 16.1% higher than before the pandemic property boom.”

Brisbane

Dr Powell said Brisbane’s housing market slowdown continued to lose significant momentum as prices stabilised.

“House prices flatlined over the March quarter to provide the best outcome since mid-2022. Despite the easing rate of decline, house prices experienced the steepest annual decline in roughly eleven years. House prices are now 6.1% below the June 2022 peak, down by about $53,000 and back to late 2021 pricing. Brisbane has seen the sharpest improvement of all capitals, along with Sydney and Melbourne.”

Adelaide

Dr Powell said Adelaide house prices reached a new record high after rising for the 11th consecutive quarter, but growth is slowing.

“This continuous stretch of rising prices means home owners have witnessed a new record house price every quarter for almost three years. Adelaide and Perth are the only capital cities currently at an all-time high. Despite the continual rise, quarterly price growth is the slowest since prices declined in mid-2020, reducing the annual growth to a two-and-a-half-year low.”

Canberra

According to Dr Powell, the stability in Canberra’s housing market was short-lived as house price falls accelerated over the March quarter.

“The current pace of quarterly decline of 2.5% is substantial compared to the historical average of 1.5%. However, it is roughly three times slower than the steepest decline recorded over the September 2022 quarter, suggesting the downturn has lost momentum. House prices are now 10.9% below the June 2022 peak, down by about $127,000 and back to mid-2021 levels. Of all the capital cities, Canberra house prices are now the furthest from their respective price peak.”

Perth

Dr Powell said house prices are at a new record high, but growth is slowing

“The upswing continues to lose steam as quarterly house price growth more than halved compared to the previous quarter, reducing the annual increase to a two-and-a-half-year low.”

“Unit prices declined over the March quarter, reversing all of last quarter’s growth. Perth and Melbourne are the only capital cities with a record price gap between property types after Perth house prices outperformed unit prices for eight consecutive quarters. This is likely to widen as quarterly and annual growth rates head in opposite directions.”

Hobart

Hobart house are in the fastest annual decline on record Dr Powell said.

“Hobart’s housing market downturn lost momentum over the March quarter, with house prices falling one-third slower than the previous quarter’s record pace. Despite this easing rate of decline, house prices have fallen for four consecutive quarters, producing the longest stretch of continuous decline and the steepest annual decline in the city’s history. House prices are now 9.9% below the March 2022 peak, down by about $75,000 and back to 2021 pricing.”

Darwin

Dr Powell said Darwin is Australia’s most affordable city in which to purchase a house and unit.

“The city’s housing market downturn gained momentum over the March quarter, with house prices falling at the fastest pace since mid-2020 to erase all of the growth seen in the previous quarter. Darwin was the only capital city not to reach a record high for house prices during the pandemic boom; they remain 8.1% below the 2013 price peak, approximately $55,000 lower.”

“House prices are, however, a substantial 29.7% higher than before the pandemic property boom. Unit price falls accelerated over the March quarter, reversing all of the previous quarter’s growth. They remain a significant $130,000 lower than the 2016 record.”



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