Australia’s home prices reached new heights in October with buyers out in force at the height of the spring selling season. Though price growth had been slowing, the stronger October rise of 0.26% marks a reacceleration after slowing through winter and early spring.
This marks 22 straight consecutive months of growth for national home prices against a backdrop of resilient housing demand defying affordability constraints.
More homes listed for sale has provided greater choice for buyers and, despite price growth regaining momentum in every capital except Brisbane, Adelaide, and Darwin in October, growth remained below the faster pace seen at the end of the summer selling season.
There remained significant regional disparities in the pace of growth too, with varying supply and demand conditions driving the diverse performance.
Key findings from the October 2024 report:
•National home prices lifted 0.26% to a new peak in October to sit 5.62% higher than a year ago.
•Prices in the combined capital cities increased 5.85% over the past year, after climbing 0.28% in October. However, price performance remained mixed across Australia.
•Price falls reversed in Melbourne as prices lifted 0.49%, the highest monthly growth rate among the capitals, following six consecutive months of declines with prices down 1.96% in that period.
•Following Melbourne, Adelaide (+0.43%) and Perth (+0.32%) recorded the strongest growth in October of the capital cities.
•Perth, Adelaide and Brisbane remained leading the capital cities for annual growth, with prices up 20.58%, 14.91% and 12.51% over the past year, respectively.
•Capital city prices outpaced regional areas over the past year and this trend persisted in October. Prices in regional areas rose 0.20% over the month to be 5.03% above October 2023 levels.
•Performance was also diverse in regional areas. Regional SA (+0.57%) and regional Queensland (+0.34%) led growth in October and recorded robust annual growth, while prices in regional Victoria saw relative weakness, down 1.51% over the past year.
Home price growth accelerates with spring selling season in full swing
Home price growth has reaccelerated after slowing through winter and early spring, with buyers out in force at the height of the spring selling season. National home prices lifted 0.26% in October and are now 5.62% higher than a year ago.
Price growth regained momentum in every capital except Brisbane, Adelaide and Darwin in October, though remained below the pace seen at the end of the summer selling season, as buyers enjoy more choice.
The increase in properties hitting the market in recent months has been met with strong demand, but is a contributor to slowing price growth along with affordability constraints and sustained high interest rates.
The pace of home price growth remained varied across the capitals in October, reflecting multi-speed market conditions, with differing supply and demand conditions continuing diverse performance across the country.
Prices in the combined capital cities have increased 5.85% over the past year, after climbing 0.28% in October.
Price falls reversed in Melbourne as prices lifted 0.49%, the highest monthly growth rate among the capitals.
Following Melbourne, Adelaide (+0.43%) and Perth (+0.32%) recorded the strongest growth in October of the capital cities. While Darwin was the only capital to see prices fall over the month, with prices down 0.04%.
Perth, Adelaide and Brisbane remained leading the capital cities for annual growth, with prices up 20.58%, 14.91% and 12.51% over the past year, respectively.
Though growth has slowed since earlier in the year in each of these 3 markets, low stock levels continue to intensify competition. With less stock on market relative to historic average levels, amid strong buyer demand fuelling stronger price growth in each of these markets over the past year.
Sellers in Perth and Adelaide retain the upper hand, and although the number of properties hitting the market has increased, total stock on market remains historically low as new listings are quickly absorbed amid robust buyer demand in both cities.
The comparative affordability of the cities homes and tight rental market has contributed to persistent strong growth in both Perth and Adelaide in recent years.
Though after the persistent strong growth, with home prices in Adelaide up 80% over the past 5 years, that comparative advantage has been eroded. Median values in Adelaide may soon eclipse Melbourne and in fact, median unit values in Adelaide have already moved ahead current sitting at $609,000 vs. $608,000 in Melbourne.
Price momentum has been consistently weaker in Melbourne as buyers have consistently enjoyed more choice relative to other markets, higher property taxes and higher unemployment in Victoria are also playing a role. Increases in taxes on investment properties have made owning a rental property less attractive in Victoria, leading to uplift in the share of investors selling.
At the same time, in the past decade construction rates relative to population growth in Victoria have been more balanced compared to other parts of the country.
However, price falls reversed in Melbourne in October, with buyers out in force for the peak of spring selling season. Melbourne ranked as the fourth most expensive capital in October, dropping back from 2nd place after recent underperformance, and it remains to be seen if October marks a turning point as buyers take advantage of the relative value that has emerged in Melbourne.
Prices rose 0.49% in October, the highest monthly growth rate among the capitals. However, prices remained 1.49% below October 2023 levels and 4.16% below their March 2022 peak.
Capital cities retain their lead over the year
Capital city prices outpaced regional areas in the past year and this trend persisted in October. Prices in regional areas rose 0.20% over the month to be 5.03% above October 2023 levels.
Performance was also diverse in regional areas. Regional SA (+0.57%) and regional Queensland (+0.34%) led growth in October and recorded robust annual growth, while prices in regional Victoria saw relative weakness, down 1.51% during the past year.
Differing supply and demand conditions are contributing with buyers in regional Victoria enjoying a lot more choice contributing to subdued price momentum. Meanwhile Victoria’s unemployment rate has risen over the last year, and is now the highest in the country.
House prices lift in October whilst units record small falls
Nationally house prices lifted by 0.27% in October, again outpacing units, with unit prices nationally recording a 0.19% lift in October.
National house prices have lifted 5.71% in the past year, slightly outpacing growth in unit values (5.14%). Though since the pandemic, onset house values are up 50% versus just 26% for units.
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 at the national level across property types broadly comparable over the past two years.
However, this trend differs across the capitals. In the past year house price growth (5.44%) has markedly outpaced unit price growth (3.63%) in Sydney and Canberra, though the opposite is true in Brisbane where unit prices have lifted 16.88% vs. 11.75% for houses in the same period.
Price performance remains mixed across Australia
Markets in regional Queensland, SA and WA continue to record strong growth. Interest rates remain at high levels, and house prices have risen significantly in recent years whilst growth in household incomes has not kept up with these increases, as a result affordability has deteriorated to its worst on record.
Generally, across the capital cities more affordable regions have outperformed over the past year, with strength in homebuying demand buoyed in these regions as buyers push down the value chain. And the more affordable regions within each city like Adelaide’s north, Ipswich in Queensland, and Perth’s northwest and south have seen rapid price increases.
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 with other capital cities after a decade of underperformance relative to east coast capitals, with prices now quickly rising.
Low stock levels are also intensifying competition, tight supply amid strong buyer demand has fuelled competitive conditions and strong price growth in the past year.
Outlook
Housing demand remains resilient, defying affordability constraints with prices lifting across much of the country in October. Home price growth has reaccelerated after slowing through winter and early spring, with buyers out in force at the height of the spring selling season.
Despite price growth regaining momentum in every capital except Brisbane, Adelaide and Darwin in October, it remained below the pace seen at the end of the summer selling season, as buyers enjoy more choice.
However, the pace of growth remains varied with differing supply and demand conditions driving diverse performance across the country.
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. Strong population growth, tight rental markets and home equity gains also continue to bolster demand.
Meanwhile, building activity remains challenged, exacerbating a chronic shortage of housing.
As a result, prices are lifting across much of the country.
Though home-price growth regained speed in October, sustained high interest rates and affordability constraints are weighing. Buyers now have more properties to choose from, and uncertainty around the timing of interest-rate cuts remains.
Still, prices are expected to remain on the rise as the busier selling season closes out.
* 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.
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