The PropTrack Home Price Index shows that home prices continued to recover in June. Sydney has led the recovery, with prices up 4.5% since their trough in November last year; but most other capitals have also seen prices start to recover over 2023. This recovery has helped lift prices across the combined capital cities to be back in line with where they were a year ago.
National home prices increased 0.3% in June, marking their sixth consecutive increase.
That means prices nationally have growth 2.3% since December, reversing a little over half the decline seen in 2022. This year’s recovery has brought prices back to 1.9% below their March 2022 peak, and just 0.1% below where they were a year ago.
Capital city prices continued to recover in June, with prices growing 0.4% in the month. That continued the reasonably brisk recovery seen across the combined capitals through 2023, with prices now up 3.0% since December last year.
Regional areas have seen a slower pace of growth in 2023 compared to capital cities, and that continued in June. Prices regionally increased just 0.05% month-on-month in June. However, regional areas did not see as large a downturn in 2022 and, as a result, prices in regional areas have held up a bit better compared to a year ago than is the case in capital cities.
Sydney home prices continued to lead the recovery in June, after leading the downturn in 2022. Sydney home prices have increased for seven straight months, and increased a further 0.6% in June. That means home prices are now up 4.5% from their trough in November last year, and are now just 3% below their February 2022 peak.
Prices are similarly recovering in Melbourne, though its recovery has not been nearly as sharp as Sydney (though it also did not see as large a decline in 2022). As a result, prices in Melbourne are still 5.2% lower than their peak in March 2022.
Adelaide, Perth and regional SA and WA continue to be the strongest performing housing markets over the past year, with prices well up in all four markets compared to a year ago.
At the other end of the spectrum, prices in Hobart fell again in June, its fifteenth straight monthly decline. Relative to peak, Hobart has seen the largest decline in prices of any city.
Prices for detached houses nationally grew 0.3% in the month; unit prices grew 0.2%. Although houses grew a little faster in June, unit prices have generally held up a little better over the past year. That means unit prices are now 0.9% higher than a year ago, while house prices are still a little lower than they were a year ago (down 0.3% year-on-year).
Markets in parts of regional Queensland, WA and SA regions continued to be the top-performing areas over the past year, recording growth in prices of 8% or more over the past year. These markets have largely avoided the downturn in prices, due to a combination of factors: relatively more affordable homes, heightened interstate migration during the pandemic, and – particularly for Perth – very low stock on market. In Perth, the total number of properties currently listed for sale is near record lows.
Within Sydney, inner city areas have the strongest rebound in prices compared to a year ago; that reverses the pattern seen earlier in the downturn, when more-affordable peripheral areas were holding up better.
The story is fairly similar in Melbourne; however, prices in the inner Melbourne region have not performed as well as prices in the east, or, particularly, the inner east.
The recovery in prices across 2023 has continued despite the RBA lifting the cash rate in early June for the second consecutive month. With inflation still well above the RBA’s target band, expectations are for another two interest rate increases by the end of 2023.
That means interest rates will continue to be a headwind for prices, but, unlike in 2022, the peak of interest rates is likely close.
Furthermore, this headwind is being offset by: a limited flow of new properties hitting the market, and strong fundamentals for housing demand.
While the total number of properties listed on realestate.com.au has picked up compared to a year ago, the flow of new properties hitting the market is subdued compared to a year ago. That may be creating competition from buyers. This is reflected in strong auction clearance rates in recent months.
With auction clearance rates strong, and fewer properties hitting the market during winter, price growth is likely to continue in the near term, despite the potential for further interest rate increases.
Methodology: 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 – June 2023’. See report for Copyright and Legal Disclaimers.
