Spotlight On House Prices

House prices in Australia have seen incredible growth, rising for six consecutive quarters. In the combined capitals, house values climbed 9.7% in the June 2024 quarter compared to the same time last year, according to Domain.

A combination of factors have contributed to this growth, including high demand, slow supply, a growing population and shifting consumer sentiment.

While overall the trend has been positive, some locations stand out.

Perth

The West Australian capital has been a standout performer over the last year. Perth house values rose 23.8% between the June 2023 and 2024 quarters. The city’s median house value surpassed $800,000 for the first time to a new high of $852,240.

This equates to an increase in value of just over $500 a day.

The Perth market has been driven by a strong economy, thanks to a mining boom, that has encouraged interstate and overseas migration. This has been combined with the slow development of new homes and an overall lack of supply in the property market. The imbalance between supply and demand has put upward pressure on prices.

But, despite these large increases, multiple suburbs in Perth have remained affordable, adding to the city’s appeal among both investors and owner-occupiers. For example, the median house price in Armadale, in Perth’s southeast, is still around $450,000, despite jumping 38.5% over the year to June.

This relative affordability has been another factor driving people to Perth. This has been reflected in the number of new home loan commitments, which was up year-on-year in June 1.9% for owner-occupiers and 27.2% for investors, according to the Australian Bureau of Statistics (ABS).

Brisbane

Like Perth, house prices in Brisbane have also had a year of large growth, up 16.9% year-on-year in the June 2024 quarter, according to Domain.

Brisbane’s median house value was $976,464 at the end of the June quarter, which was an increase of around $417 a day.

Buyers are being drawn to Brisbane, and Queensland more generally, largely due to lifestyle. Like Perth, the supply of both new and existing homes to the market has been unable to keep up with this influx of population, putting upward pressure on prices. To put this into perspective, SQM Research showed that the number of listings for Brisbane was 12.5% lower in June than at the same time last year.

But, unlike Perth, Brisbane’s house market may be nearing its peak. CoreLogic research director Tim Lawless told the Australian Financial Review in July, “It’s unlikely this market will drift into negative territory through the second half of the year, but it looks like the rate of growth has peaked in Brisbane.”

This deceleration is largely due to affordability constraints in the market.

Canberra

House prices in Canberra took much longer to come out of their decline than other cities. The first increase came in the March 2024 quarter, where values were up 1.1% year-on-year, according to Domain.

Since then, there has been further improvement, climbing 0.8% between the March and June quarter to a median value of $1,041,432.

But, despite this positive news, it may be too early to claim the city is out of its slump. “Canberra house prices are the furthest from their price peak among all the capitals and have only recovered 1/16th of their losses,” said Domain’s chief of research and economics, Nicola Powell.

Melbourne

Like Canberra, Melbourne has taken much longer to show improvement. But, house prices in the June quarter rose at the fastest pace in over two years when they increased 3.6% year-on-year. This took them to a median value of $1,068,805.

Melbourne was hit hardest by the pandemic, facing long periods of lockdowns and a large exodus out of the city. As a result, it has taken longer to recover and by the time the first interest rate hike hit in 2022, Melbourne was already behind other cities in house price growth.

But, buyers appear to be taking advantage of these sluggish prices. “It showcases that buyers are using those stagnant conditions that we have been seeing to make their move, and I think that’s what helped drive up that price growth this quarter,” said Dr Powell.

Residential home settlement numbers back this up, with Melbourne dominating the list of suburbs that recorded the highest increases in residential settlements, according to PEXA.

What’s next for house prices?

While the house market is showing positive signs in most capital cities, several factors could impact the trajectory of prices.

Strong population growth, limited housing supply and recent tax cuts may continue to put upward pressure on prices. However, rising living costs, increasing unemployment and economic uncertainty could dampen demand and slow price growth.

Shore Financial can help you buy a house, whether to live in or for investment purposes. To discuss your options, call us on 1300 416 700, email us on info@shorefinancial.com.au or fill in this online form.