The PropTrack Home Price Index shows national home prices increased a further 0.22% across the country in August, now cycling through 20 consecutive months of growth, although the pace of growth has slowed through the seasonally quieter period.
Housing demand remains buoyant, defying affordability constraints and fuelling continued growth across much of the country. However, performance differs around the country with the balance between supply and demand the primary factor driving that variance.
Combined capital city markets increased a further 0.25% in August to be 6.49% higher over the past year.
Perth has maintained its streak of relative outperformance and remains the strongest market in the country for monthly (+0.79%) and annual (+23.24%) home price growth.
Perth, Adelaide and Brisbane have recorded the fastest pace of growth of the capital cities for much of the past two years, with Perth prices up 23.24% in the past year, followed by Adelaide (+15.12%) and Brisbane (+13.95%).
Tight supply amid strong buyer demand has seen competitive conditions fuelling strong price growth in each of these markets.
In particular, sellers in Perth and Adelaide are entering the spring selling season with a strong advantage, though the number of properties hitting the market has increased in recent months, total stock on market remains around 40% and 30% below the prior five year average, respectively, as new listings are quickly absorbed amid strong buyer demand in both cities.
The comparative affordability of the cities homes and tight rental market has also contributed to persistent strong growth in both Perth and Adelaide, though if current trends continue, values in Adelaide may eclipse Melbourne by the first quarter of next year.
Melbourne home prices fell 0.18% in August, marking the fifth straight month of declines with prices now down 1.98% in that period. Prices were 1.46% below their August 2023 levels and 4.66% below their March 2022 peak.
Price momentum is weaker in Melbourne as buyers have consistently enjoyed more choice relative to other markets. In July 2024, total listings in Melbourne were the highest since November 2018 and 24% above the prior 5-year average for total listings. In July new listings in Melbourne were the highest since May 2024 and 31% above the prior 5-year average.
At the same time, construction rates relative to population growth in Victoria have been somewhat balanced compared to other parts of the country. Differences in relative affordability and home construction have also contributed in driving divergence in outcomes across the country.
Higher property taxes in Victoria are also likely to be playing a role - increases in taxes on investment properties have encouraged investment property owners to exit. Victoria is also not attracting the same uplift in investor activity as other states as a result.
The Victorian government has rendered conditions relatively unfavourable for investors and as a result more investors are selling than buying.
Capital city prices have outpaced regional areas over the past year and this trend continued in August.
Prices in regional areas rose 0.16% over the month to be 5.32% above August 2023 levels.
Performance was has also varied in regional areas. Regional WA (+0.41%) and regional Queensland (+0.26%) led growth in August and over the past year, while regional Victoria has sustained its streak of relative weakness, with prices down 1.74% over the past year.
Buyers in regional Victoria are enjoying a lot more choice with total stock on market around 40% above the prior 5 year average, giving buyers the upper hand.
House prices (+0.27) again outpaced units (+0.07) in August.
After a significant revaluation of space favouring house values since the onset of the pandemic, affordability pressures, as well as the rejuvenation of city living has left home price growth across property types broadly comparable over the past two years.
Generally more affordable regions have outperformed over the past year, no doubt driven by challenged affordability from the continued high interest rate environment. WA regions account for six of the top 10 fastest growing regions in the past year, with northern Adelaide, western Brisbane, and central Queensland making the remainder.
Perth has been the strongest performing city – and indeed the strongest performing market overall – in the past year, and regional WA the strongest regional market.
One reason Perth is one of the hottest markets in the country is its relative affordability. Despite recent gains, Perth housing values remain affordable compared to other capital cities after a decade of underperformance relative to east coast capitals, with prices now quickly rising. Low stock levels are intensifying competition, and sellers are entering the spring selling season with the upper hand.
Home prices in 2023 remained resilient to the higher interest rate environment and this improvement in conditions that materialised in 2023 has continued in 2024, with national prices cycling through their 20th month of growth.
Although the number of homes hitting the market this year has lifted, strong population growth, tight rental markets and home equity gains are bolstering demand. Meanwhile, building activity remains challenged, exacerbating a chronic shortage of housing.
Supporting price growth at present and in the period ahead, July’s tax cuts boosted borrowing capacities and buyers’ budgets, while the persistent growth in home prices is likely motivating many to overcome affordability challenges.
As a result, housing demand remains buoyant, defying affordability constraints and pushing prices higher across much of the country.
However, price growth differs around the country with affordability differences and the balance between supply and demand primarily driving that variance.
Home prices are expected to lift as activity ramps up into the spring selling season. However, the expected uplift in choice, the uncertainty around timing of interest rate cuts and affordability constraints are likely to dampen the pace of price growth from the faster pace recorded in the first quarter of this year.
* The PropTrack Home Price Index measures the monthly change in residential property prices across Australia to provide a current view on property market performance and trends. PropTrack Home Price Index uses a hybrid methodology combining repeat sales with hedonic regression. The repeat sales method matches resales of the same property while the hedonic regression estimates values based on the value of similar properties. The hybrid model allows two properties in the same Australian Bureau of Statistics Statistical Area 1 (SA1) region, of the same type, to be matched and controls for differences in property characteristics, as in a hedonic regression. The PropTrack Home Price Index is a revisionary index with the whole back history updated monthly with current transaction information.
** This report uses realestate.com.au internal data and data sourced from third parties, including State government agencies. It is current as at the time of publication. This report provides general information only and is not intended to constitute any advice and should not be relied upon as doing so. If you wish to cite or refer to this report (or any findings or data contained in it) in any publication, please refer to the report as the ’PropTrack Home Price Index Report – July 2024’. See report for Copyright and Legal Disclaimers.
