Home prices hit record high despite selling surge
Daniel Butkovich, Property Journalist
First published 01 October 2023, 08:53 AM
Last updated 05 October 2023, 02:42 PM
The latest PropTrack Home Price Index shows the price falls of last year — triggered by rising interest rates — have been completely erased across much of the country, bringing the cost of a typical Australian home to its highest ever level.
Australia’s median home price rose 0.35% in September and the capital city median increased 0.41%, even though buyers had more properties to choose from last month.
PropTrack senior economist Eleanor Creagh said growth has been driven by record levels of net overseas migration, tight rental markets and a housing shortage.
"Despite the uplift in the number of properties coming to market, national home prices have moved higher again, regaining 2022’s rapid price falls in entirety to reach a record high in September," Ms Creagh said.
Prices grew fastest in Perth (0.71%), Sydney (0.48%), Adelaide (0.48%) and Brisbane (0.39%) in September, building on strong gains last month.
Perth, Adelaide and Brisbane are now at record highs, while Sydney prices are just below the peak recorded in February 2022.
"The smaller capital city markets continue to record a stronger pace of growth," Ms Creagh said.
The big increase in properties listed for sale in Australia’s two biggest markets hasn’t slowed price growth, Ms Creagh said.
"While a sharp increase in the number of properties hitting the market in Sydney and Melbourne has been improving choice for buyers, strong demand has seen prices continue to lift," she said.
Home prices rose in Sydney and Melbourne in September, despite a surge in properties hitting the market in both cities as the spring selling season ramps up. Picture: Getty
Prices declined in regional Victoria and the Northern Territory, and fell very slightly in Darwin and regional Tasmania.
The regional median price rose 0.18% in September and is now sitting 0.78% below the previous record, but prices in regional South Australia and Queensland are at record highs.
Pressure from booming population growth and a shortage of new housing stock is likely to cause prices to rise further, Ms Creagh said.
"Looking ahead, interest rates have likely peaked and population growth is rebounding strongly," she said.
"As we head further into spring, more markets are likely to reclaim 2022’s fast falls to set new peaks."
How home prices changed around the country in September
Sydney
Prices in Sydney have rebounded significantly since bottoming out in November 2022, with the median value rising 7.43% after 10 consecutive months of growth.
Sydney’s median home value is now $1.057m – just 0.03% below its previous peak.
"Sydney has led Australia’s home price recovery after leading the downturn in 2022," Ms Creagh said. "Prices in Sydney have now regained most of the decline in values recorded in 2022."
The fastest growth was recorded in the City and Inner South, North Sydney and Hornsby, and Parramatta SA4 regions, with annual price growth of about 9% in each of these areas.
Sydney’s northern suburbs and the inner city were the regions where home prices grew the fastest over the past year. Picture: realestate.com.au/sold
Belle Property Lane Cove principal James Bennett said increased buyer confidence amid low stock levels had pushed up prices over the year, but the surge in new listings was giving buyers more choice.
"There's still plenty of buyers out there and we can get more properties sold, but they're a lot more price sensitive," he said.
More buyers were upgrading to larger properties, which was driving strong results for more valuable homes, Mr Bennett said.
Melbourne
Although prices in Melbourne are still more than 4% below the peak of March 2022, the city has recorded positive annual price growth for the first time since 2022.
"Melbourne home price growth accelerated in September, with prices climbing 0.25% month-on-month," Ms Creagh said.
"Home prices are up 1.66% from their low point recorded in January 2023, meaning the price recovery in Melbourne is lagging Sydney and Brisbane, but remains ahead of the recovery seen in Hobart and Canberra."
Melbourne's inner east and south have recorded some of the city's strongest price growth over the past year. Picture: realestate.com.au/sold
Melbourne’s median price is now 0.07% higher than a year ago, but pricier regions have outperformed the wider city and led the recovery.
Values rose about 4% in the Inner East, 3% in the Outer East and 2% in the Inner South over the past year.
Brisbane
The median home value in Brisbane is now $762,000, the highest value ever recorded.
"Home prices in Brisbane have already regained 2022’s price falls and are rising at a fast pace, jumping 0.39% in September to hit a new price peak," Ms Creagh said.
Brisbane’s median prices has risen 5.82% in the past year, but the city’s more affordable southern and western regions have recorded stronger growth.
Stock levels remain low in Brisbane, with the total number of properties for sale about 14% lower compared to a year ago.
Over the year, prices grew 9% in the Brisbane - South and Ipswich regions, and 7% in Logan - Beaudesert.
Strong demand from buyers with few properties to choose from has pushed prices higher, particularly in outer suburbs, said Torres Property director Will Torres.
"There’s still interstate migration coming in and they’re mainly focused on the inner city market," he said.
"That’s pushing the local buyers out further. They’re finding themselves having to compromise and go out that extra one or two kilometres to find a home in their budget."
Perth
The property market is booming in Australia’s strongest performing capital city, with Perth’s median value jumping 0.78% in September to $597,000 – a new record high.
Prices have grown by 9.24% over the past year, and a whopping 53.5% since March 2020.
Even so, Western Australia is the most affordable state for home buyers, according to the PropTrack Housing Affordability Report, and that affordability is one of the factors driving strong demand from buyers, Ms Creagh said.
Adelaide
Adelaide home prices grew another 0.48% in September, taking the median to $689,000.
Prices rose 8.31% over the past year – faster growth than any other capital apart from Perth.
Adelaide’s north was the standout performer, with prices rising 12% in the past year.
This three-bedroom home on a 392sqm block in Oakden in Adelaide's northern suburbs sold in September for $686,000 – just below Adelaide's median price.
The affordability of Adelaide relative to other cities has lessened the effect of rising interest rates and supported growth, Ms Creagh said.
Meanwhile, low stock levels have intensified competition. Although more properties have come to market in recent months, the total number of properties on the market remains lower than a year ago.
Canberra
Home prices in Canberra crept up again in September, rising 0.30% over the month to a median value of $842,000.
Canberra’s home price recovery has been slower than other capitals, with prices still 5.18% below the peak in March 2022.
This leafy property in Weston in Canberra's southwest sold for $1.09m in September. Picture: realestate.com.au/sold
Despite lagging behind the other capitals, prices are still up more than 36% since the start of the pandemic.
Hobart
Prices in Hobart edged a little higher in September, rising 0.09%.
Hobart prices are yet to recover from the falls during the most recent downturn, and buyers are spoilt for choice, with 32% more properties on the market than this time last year.
The median price is down 3.83% over the past year and 6.6% since the peak, but this comes after strong growth prior to and during the pandemic.
This energy-efficient property on about an acre of land in Mount Nelson in Hobart's south sold for $1.15m in September. Picture: realestate.com.au/sold
Prices are still up 38.4% since March 2020, and Adelaide, Perth and Brisbane are the only capitals that grew at a faster rate since then.
Darwin
Prices in Darwin remained flat, falling by only 0.01% in September.
The slight decrease in the median price meant Darwin was the only capital where values retreated in September.
Prices in Darwin are down 1.64% over the past year and 2.43% since the peak in May 2022.
"Darwin has not seen a recovery in prices in 2023, but it also did not see as large a downturn in 2022," Ms Creagh said.
Originally published at: https://www.realestate.com.au/news/home-prices-hit-record-high-despite-selling-surge/
