Rising property prices have seen the typical homeowner in some Australian capitals gain more than $100,000 in equity in the past year, new data shows.
The latest PropTrack house price index shows property prices rose further across the country in March, even as more properties came on the market as homeowners in most capital cities sought to take advantage of strong market conditions. It shows what was done.
Australian house prices rose by 0.34% in March, with capital city median prices rising by 0.4%.
The rise means Australian property prices have reached an all-time high, building on last month's rise.
In Sydney, Australia's most expensive city, house prices have increased by 8.61% over the past year, with the median price of a typical home rising to $1,369,000., That's about $111,000 more than just 12 months ago.
Data shows Sydney house prices are currently at record highs, along with prices in Perth, Brisbane and Adelaide.
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Median house prices in Sydney hit a new record high in March, according to Prop Track data. Photo: realestate.com.au/ sold
The typical home in Perth now costs $707,000, with the median price about $100,000 higher than a year ago.
Brisbane's median house price is now about $96,000 higher than a year ago, and Adelaide's is $78,000 higher.
House price increases were recorded in every capital city except Hobart in March.
Eleanor Cree, senior economist at PropTrack, said demand for home purchases was keeping pace with rising real estate listing levels, pushing up prices.
“Limited housing supply relative to demand is offsetting a high interest rate environment and worsening affordability,” he said.
“Despite an increase in the number of homes on the market this year, demand absorbed the surge, leading to further price increases.”
Changes in house prices across Australia in March
The Reserve Bank kept interest rates on hold last month, and moderate inflation suggests high interest rates are easing spending.
However, market pricing suggests interest rate cuts could begin in September, which could further spur home-buying activity as buyers' budgets grow and confidence improves. .
“Many expect the next move in interest rates to be lower, but the timing remains uncertain,” Cree said.
“Expectations that interest rates will begin to fall in the second half of 2024 will maintain confidence among buyers and sellers.”
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“Homebuyers are starting to think now is a good time to buy a home, and more sellers are thinking now is a good time to put their properties on the market.”
“Prices are expected to rise further in the coming months, especially as expectations remain for interest rates to fall in the second half of 2024,” Cree said.
Ben Horwood, a real estate agent at Horwood Nolan in Sydney's inner west, said there were more homes available to buy, but it was still not enough to dampen buyer demand.
“I think we will see a lot of A-grade homes coming onto the market this spring from people who have been looking to downsize since the pandemic and are confident they can get a very good price.”
“I see no reason why we can't continue to see very strong growth, especially in the best areas.”
Demand and supply imbalances drive growth of affordable capital
Significant population growth has accelerated property price growth, particularly in markets where listings remain low, such as Perth.
Western Australia's capital recorded the biggest increase in house prices among capital cities in March, rising by 0.99%.
Price in Perth is currently 18.62% That's up from a year ago, making it the strongest real estate market in the country so far. This is also his strongest price increase on record since 2010, according to PropTrack data.
The rate of price increase was greater for houses (19.25%) than for units (13.21%).
A huge shortage of homes for sale is driving up prices significantly and making upgrades difficult in Perth. Photo: realestate.com.au/ sold
Ms Cree said supply was at record lows in Perth while buyer demand was strong, creating a seller's market.
“Buyers in Perth are faced with a choice that is close to an all-time low,” she said. “Affordability has fallen significantly as interest rates have risen, but WA remains the most affordable state in all of Australia, which may be supporting prices.”
Latest data from the ABS shows Australia's population grew by around 660,000 people in the year to September 2023, an increase of 2.5%. Western Australia's population grew faster, increasing by 3.3% over the same period.
Meanwhile, the total number of properties for sale in Perth fell by more than 25% in the year to February 2024, according to the latest PropTrack Listings Report.
The agency's WA general manager Stuart Cox said a “significant undersupply of stock” in the face of strong demand was causing significant price increases in Perth, while also making upgrades difficult.
“The biggest problem we have right now is that when sellers put their properties on the market, there's a lot of interest, but they can't find anything to buy,” he said.
“Even if stock levels in Western Australia doubled, we would still be in a seller's market. I've never seen a market like this.”
There is a shortage of homes for sale in Brisbane and intense competition for available homes is driving up prices. Photo: realestate.com.au/ sold
Listings in Adelaide and Brisbane have also fallen, with prices rising 13.47% and 12.9% respectively over the past year as buyers compete for a limited number of homes on the market.
Cree said that while the relative affordability of housing in these cities, population growth and very tight rental markets support home values, low inventory levels and increased competition amid strong purchase demand He said that
Canberra's recovery progresses as Melbourne gains momentum
Canberra house prices rose by 0.67% in March, the highest monthly growth rate of any capital city except Perth. This follows a 0.49% rise in February.
Prices in Canberra remained relatively stagnant throughout 2023, but are now just over 2% higher than a year ago, marking the capital's largest annual growth rate since September 2022.
“Canberra's price recovery is still underway, with prices now 4.34 per cent below their March 2022 peak after recovering just over a third of their losses,” Mr Cree said.
Canberra house prices rose in March as confidence returned to the market.Photo: Getty
Ray White Canberra sales director and auctioneer Alec Brown said confidence in the Canberra market had returned and more buyers felt it was a good time to buy property.
“The market feels confident now that we've reached the peak of the interest rate cycle,” he said. “This has gotten people back on the buying journey.”
“The average number of bidders is starting to increase, and the winning bid rate is following suit,” he said.
Melbourne prices are currently up 1.71% over the past year, the highest annual growth rate since June 2022, but still 3.35% below the March 2022 peak.
Meanwhile, prices were relatively flat in Darwin (up 0.03%) and Hobart (down 0.03%), with both markets yet to recover from the downturn.
Unit values increase faster than houses
The unit market is off to a strong start to 2024, with prices up 2% so far. This is slightly faster than his 1.48% growth recorded in housing.
At the national level, unit price growth has outpaced housing growth so far this year, due to worsening affordability due to high interest rates and rising prices. Photo: realestate.com.au/ sold
Although home prices have increased significantly more than unit prices during the pandemic, the apartment market is at a relative discount due to deterioration in home prices due to rising interest rates, Cree said.
“Strong demand for inner-city living post-pandemic, combined with rapid population growth and housing supply constraints, as well as relative value unit offers, are driving up buyer demand and prices in the apartment market. There is a possibility.”
