Home price recovery strengthens as national values return to annual growth
Daniel Butkovich, Property Journalist
First published 01 August 2023, 12:01 AM
Last updated 01 August 2023, 11:24 AM
National home prices rose for the seventh consecutive month in July, increasing 0.16%, according to the latest PropTrack Home Price Index.
In three capitals — Brisbane, Adelaide and Perth — prices are now at record highs, despite interest rates rising rapidly since mid-2022.
Strong demand from buyers amid surging population growth and a limited flow of new properties hitting the market has supported price growth throughout 2023, largely offsetting the effects of high interest rates.
“Although total stock on market has increased slightly, the flow of new listings has remained soft in recent months, leading to increased buyer competition and solid selling conditions,” said PropTrack senior economist Eleanor Creagh.
Prices grew in July in every capital city except Darwin and Canberra, where prices declined only slightly.
“Home price growth has been stronger in the capital cities than regional areas this year,” Ms Creagh said.
“This trend continued in July, with regional areas falling 0.03% and capital city prices lifting 0.25%”
“However, regional markets have still recorded a smaller decline from peak levels, given prices held up better for much of 2022.”
Here’s how prices changed around the country in July.
Sydney
Sydney continues to lead the recovery, with home prices rising 0.28% in July — the eighth consecutive month of growth — to a median value of $1,046,000.
“Prices in Sydney have now regained most of the decline in values recorded in 2022,” Ms Creagh said.
Home values have increased 5.26% since the November 2022 low, and are now just 2.22% below the February 2022 peak.
Property prices in Sydney's city and inner south region delivered strong performance over the past year. Picture: Getty
Houses continue to outperform units in both monthly and annual growth, with the city’s median house value rising 0.33% in July to $1.33 million, up 3.34% compared to a year ago.
Sydney’s median unit value rose 0.12% over the month to $789,000, growing 2.23% in the past 12 months.
The city and inner south region delivered Sydney's strongest growth in the past year, rising almost 7%, which McGrath Surry Hills principal Mark Foy attributed to a shortage of new listings.
“What fluctuates in the inner city is stock levels but what remains very consistent is buyer demand,” he said.
Melbourne
After increasing just 0.01% in July, Melbourne’s median home value reached $805,000, growing almost 1% since the January 2023 low.
Melbourne’s recovery has lagged behind other capitals, with prices still 4.91% below the March 2022 peak.
Melbourne’s inner east has been Victoria’s best performing market over the past year, with values rising about 3%.
Home values in Melbourne are still below last year's peak, but areas such as the inner east and north west have returned to positive annual growth. Picture: Getty
“I would say that we’ve had a levelling out in our market,” said Marshall White Boroondara director Stuart Evans.
“Melbourne often follows Sydney, but a few months behind, so I wouldn't be surprised, based on that, if we start to see some slightly more positive data."
“We're seeing some consistent numbers at open homes. There have been a few inspections where we’ve had in excess of 40 groups through."
“We’re starting to see some good numbers in terms of new listings coming online in the next two to four weeks, with quite a few vendors getting organised to take advantage of a pre-September school holidays campaign.”
Brisbane
Home prices in Brisbane reached a new record high in July, rising 0.37% to a median of $742,000.
“Brisbane has now regained 2022’s price falls entirely,” Ms Creagh said. “Prices are now 1.98% above their levels a year ago.”
Home prices in Brisbane didn't fall as much as in many other capital city markets, which has likely helped Brisbane regain a fresh record high sooner, Ms Creagh said.
"Brisbane has been one of the strongest performing markets Australia-wide in recent years. Population growth and comparative affordability have played a role in driving this outperformance."
Brisbane property prices have reached record highs, with units outperforming houses over the past year. Picture: AAP Image/Darren England
Brisbane unit values increased 5.18% in the past year, outperforming houses which grew 1.47% in value over the last 12 months.
“There isn't a lot of stock on the market, so it’s keeping a floor under prices," said Ray White New Farm real estate agent Claudia Marchand.
“When you look at houses, prices went absolutely through the roof in the last couple of years so it’s sort of stabilising now.
"Units haven't gone through that yet. They've increased, but I think there’s a bit of fire left.”
Perth
Home prices in Perth reached a record high of $583,000 in July after climbing 0.36% over the month.
Perth has been the nation’s best performing capital city market market over the past year, with annual growth of 6.56%.
“After Darwin, Perth is the cheapest capital city market in terms of dwelling values,” Ms Creagh said.
“The relative affordability of the city’s homes and limited choice for buyers have supported prices.”
Agents say strong investor demand for affordable freestanding houses is fuelling price growth in Perth. Picture: Getty
Nola Tully of Harcourts Elite Agents said overwhelming demand from east coast-based investors was driving up prices, particularly for freestanding houses on larger blocks with development potential.
“They’re buying them sight unseen,” she said. “It’s definitely pushing the owner occupiers out.”
“One that I sold last week, we put it on the market, and by 5:00pm the next night I had nine offers. It sold for 10% more than our expectation.”
Adelaide
Adelaide’s price growth was the strongest of all the capitals in July, with values growing 0.62% last month.
The city’s median value reached a record high of $676,000 after growing 5.95% in the past year.
Adelaide’s relative affordability has meant prices held up better than other capitals through the rate rise cycle, said Ms Creagh.
“Low stock levels are also helping to insulate home values, intensifying competition,” she said.
Adelaide's median price is at a record high, with consistent growth despite rapid interest rate rises. Picture: Getty
Values in Adelaide have grown more than 50% since March 2020, delivering the strongest growth of all the capitals since the start of the pandemic.
Unit prices in Adelaide increased 8.5% in the past 12 months to a median of $508,000
Meanwhile, values in regional SA are now 9.19% higher than a year ago.
Canberra
Prices in Canberra declined slightly in July after rising for the past two months.
Despite modest gains this year, Canberra’s median home value of $843,000 is still almost 6% below the peak achieved in March 2022.
Canberra home values are still 35% above pre-pandemic levels. Picture: Getty
“Units and houses that are move-in ready are holding their value,” said Brett Hayman of Hayman Partners. “Houses that need a lot of work have come back more because of the cost of trades and materials.”
“I think stock levels will be lower this spring than in previous ones, which will probably hold prices steady. I think there will be a shortage of properties due to people sitting and waiting to see what the market does.”
Hobart
Hobart’s median home price increased by 0.21% to $680,000 in July after declines in most months since the March 2022 peak.
“Hobart remains the weakest performing market when comparing annual price growth and change from peak,” Ms Creagh said. “However, this comes after several years of outperformance as well as strong growth during the pandemic.”
Prices in Hobart are yet to recover most of the decline in values since March 2022. Picture: Getty
Prices in Hobart are still about 38% higher than March 2020, while prices in regional Tasmania increased by more than 50% over the same period.
Darwin
After falling 0.08% in July to a median of $490,000, home values in Darwin are now about 2% below the May 2022 peak.
“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.
Interest rate pause expected to boost market confidence
The Reserve Bank’s decision to hold the cash rate steady in July likely increased confidence among both buyers and sellers.
“Interest rates are nearing their peak, if not there already,” Ms Creagh said. “This is likely to sustain confidence and maintain the lift in home prices, resulting in more markets returning to positive annual price growth.”
Economists say the RBA is at or near the end of its hiking cycle. Picture: Getty
Although interest rates could rise further in the remaining two months of RBA governor Philip Lowe’s term, big bank economists expect the cash rate to fall under new RBA governor Michele Bullock, easing the pressure on households and potentially increasing buyers’ borrowing capacities.
Meanwhile, auction clearance rates remained firm through July, which was likely to boost seller confidence, Ms Creagh said.
“If the flow of new listings picks up as we head into spring, the pace at which prices have grown this year may slow.”
Originally published at: https://www.realestate.com.au/news/home-price-recovery-strengthens-as-national-values-return-to-annual-growth/
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