A surprise rebound in property prices has broadened to most Australian capital cities according to PropTrack, with Perth broker Peter Gomm noting strong competition for limited housing stock.
PropTrack’s Home Price Index for May found home prices rose 0.33% nationally in May, or 1.03% over three months, making it the strongest quarterly growth since the peak in prices in March 2022.
Prices are up 1.55% from their low point in December 2022. Every capital city except Darwin saw increases in May, led by Canberra (up 0.65%), Sydney (up 0.58%) and Adelaide up (0.58%).
PropTrack senior economist Eleanor Creagh (pictured above left) said the new data showed that the decision by the Reserve Bank to lift the cash rate in May had not deterred the current home price rebound.
“The rise in prices seen so far this year gathered pace in May, broadening and accelerating across markets,” Creagh said. “Supply constraints have eased slightly with respect to total stock for sale, but the flow of new listings remains soft. This is keeping a floor under prices, with sellers benefitting from less competition with other vendors.”
Perth leading 2023 property price growth
Perth prices have climbed by 3.07% in 2023, including a 0.64% increase in May, which PropTrack said was a new peak and made it the strongest performing capital city market in the year-to-date.
Gomm (pictured above right), director of Perth brokerage Gomm Finance, agreed price increases were occurring, although it was not uniform, and it arose out of a Perth market that has “done nothing since 2007”.
“Prices rose to giddy heights, fell back and are now getting going again,” Gomm said. “Over the last 16 years the market hasn’t done much; there would be quite a few people who have bought investment properties in the last seven to 10 years who would be lucky to get their money back.”
After Darwin, PropTrack said Perth was the cheapest capital city market in terms of dwelling values, and the relative affordability of the city’s homes and tight supply had supported prices.
Gomm said Perth had a lack of housing stock, with only about 6,000 dwellings on the market now, compared with about 12,000 to 13,000 during what would be considered a normal market.
Of those, he said quite a few were strata-title apartments and units or townhouses rather than houses.
“We are in Subiaco in inner city Perth, so we are in close proximity to the city,” Gomm said. “There are hardly any houses and if one does come on the market, it’s like seagulls on a chip at the open home.”
Gomm said with multiple buyers these properties regularly sole for more than the asking price.
“In the mortgage belt suburbs, the for sale signs get banged into the ground with a sold sticker.”
Gomm said Perth’s mining industry and strong economy meant there was incoming demand from people moving interstate and overseas, which was driving up competition for limited housing.
The rental market is also at historical highs in terms of competition, he said.
“The state government is spruiking to get more people like nurses, lawyers and accountants, but where are all these people going to live? The issue is there is hardly anything to buy or to rent.”
Further price growth in 2023 uncertain
Gomm said mortgage business had been very busy, whether the demand was being driven by “people armed with cash” following COVID, or the recent bank cashback-driven refinancing wave.
“The market took off about 18 months ago and turbocharged what was an already busy time for us – we got really busy, and were often struggling to keep up with demand.”
However, Gomm said he was primarily seeing owner-occupier interest rather than investors, which he put down to the impact of changing tenancy and tax laws as well as a lack of capital growth.
PropTrack data indicates that Sydney prices are up 3.03% from their November 2022 low, putting them less than 2% down on levels seen at this time last year. The regions are not seeing the same gains as capital cities across the country, with regional prices lifting by just 0.03% in May.
“Although prices are at or close to peak levels, interest rates may still rise further and the economy is also expected to slow,” Creagh said.
“These factors may weigh on home prices in the months ahead. However, the continued
tightness in the labour market, stronger housing demand and the limited supply environment are likely to support an ongoing recovery.
