The PropTrack Home Price Index shows that home prices increased a further 0.08% across the country in July, a slower pace of growth than has been seen this year, which is not uncommon in winter.
Perth continues to outperform, increasing another 0.9% in July. National home prices continued to increase in July but only just, increasing 0.08%, the smallest monthly increase recorded since prices stopped falling in late 2022.
This increase pushed national home prices up 6.3% over the past year, to record a new price peak.
The slowdown in price growth is not unexpected, it coincides with continued strong listings activity and July is the seasonally weakest month for home price growth.
The July result means home price growth over the past three months has been below 1% for the first time since February 2023.
Combined capital city markets increased a further 0.15% in July to be 6.6% higher over the past year.
The smaller capital cities of Perth (+0.88%), Adelaide (+0.58%) and Brisbane (+0.34%) continued to lead price growth in July.
Relative affordability and lifestyle factors continue to drive housing demand in these cities, with annual growth remaining above 10%, and Perth topping 20%.
By contrast, regional areas recorded a slight decline in prices in July, of -0.12%. This followed decreases in prices in many regional areas, most notably in regional Victoria where prices fell 0.63% in July.
Slower price growth in regional areas has been the norm after exceptional increases during the pandemic. Except in regional Queensland, South Australia and Western Australia, which all have posted double-digit price growth over the past year.
Melbourne posted the fourth consecutive month of price falls, although the fall in July was a modest -0.21%. Melbourne prices have now declined 1.5% since March - but prices are now back to the level they first hit in August 2021.
This broad price stability has helped buyer and seller confidence in Melbourne, with new property listings in June up 9.1% year-on-year.
By contrast, Sydney prices continued their expansion in July, up 0.12%. Prices are now up 6.1% over the past year in the most expensive market - despite much of the growth nationally focused on more affordable regions.
Unit prices (+0.09) again outpaced houses (+0.07) in July.
After a significant revaluation of space favoring 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.
Perth regions continue to dominate the list of strongest performing markets over the past year.
But looking across the capital cities, there is a clear trend that more affordable regions have tended to perform the best, no doubt driven by challenged affordability from the continued high interest rate environment.
Broadly, the July data shows a continuation of trends that have played out over the past year.
National prices continue to increase, but price growth has slowed. In part this slowing is seasonal, but it also reflects binding affordability constraints as prices are more than twice the levels seen when interest rates were last at this level, in 2011.
All markets continue to see strong housing demand, tight rental markets and rebounding investor activity. But differences in relative affordability and home construction are driving divergence in outcomes across regions.
Perth, Adelaide and Brisbane continue to outperform. These markets have enjoyed relative affordability, but with Brisbane now the second most expensive market, price growth there may slow over the coming period.
By contrast, in Melbourne and the ACT, where prices are relatively high, and housing construction progressing more positively than elsewhere, there have seen small declines in prices but broadly unchanged price levels over the past year.
The Sydney market sits somewhat between these two groups, with high prices but more constrained home construction. This continues to drive above-average price growth, up 6.1% over the past year.
Key to the outlook over the coming period will be continued strong income growth, which along with the Stage 3 tax cuts, has boosted disposable incomes and borrowing capacities.
As always, buyers and sellers will be focused on the course of interest rates. With the Reserve Bank set to meet in early August, some are tipping rates to rise further, which could quickly end the run of price growth the market has experienced since early 2023.
But on balance, we expect further modest rates of home price growth over the coming months as the market moves into the traditional spring selling season.
* 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.
