Australia’s housing market recovery has gained momentum over the June quarter, with capital city house prices rising nearly four times faster than the first quarter of the year, to produce the steepest gain since late 2021, according to a Domain report.
Domain’s latest House Price Report, showed the national median house price lifted by 2.7% in just three months, to $1,049,812, and every capital city has seen median house prices rise, except Canberra, where prices have stabilised.
House prices have now increased for two consecutive quarters, recovering around $35,000 of the $60,000 value lost last year – this despite fears of a long-lasting downturn driven by rapid interest rate hikes and inflationary pressures.
The national unit price climbed 2.6% to $608,898 – a sharp contrast to the March quarter, when unit prices slipped by 0.4%.
“I expected this strong rebound. I think overall, we’ll see a more steady rate of growth if listings continue to rise,” said Nicola Powell (pictured above), Domain chief of research and economics.
Leading the recovery was Sydney, which saw the greatest acceleration in growth and was now roughly two-thirds into its recovery – this after experiencing a 6.7% growth following a 9.5% loss during the market downturn.
“Sydney is probably going to be that anomaly, with a level of growth that isn’t sustainable against the backdrop of our current economic environment, but I don’t think prices will deteriorate; instead it’ll become steady as listings rise,” Powell said.
Increases in property prices and market recovery have been felt across the nation, with Perth and Adelaide reaching record highs.
“I think both these cities are battling fewer affordability issues than the east coast,” Powell said. “But there are also favourable demographic trends that are supporting [property] demand. Price points have also changed – in particular in Adelaide – dramatically since pre-pandemic, helping reach these new milestones during a recovery period.”
Andrew Downing, of Ray White Adelaide City, said the new milestone was due to the influx of east coast buyers during the pandemic period.
“[Adelaide] didn’t have any price drop-offs because we came from a lower, more affordable base and kept slowly moving ahead to a peak,” Downing said.
He said Adelaide saw a spike in housing demand during and after the pandemic as out-of-staters fled tight lockdown restrictions and has now become a popular place to buy in.
“I think [Adelaide] reached a normal market, but there’s still a lot less listings in the market than you’d expect,” Downing said.
Powell said low housing stock has helped push up prices at a time when the cash rate is at an 11-year high and borrowing power has been reduced.
“The total number of homes for sale is 22% below the five-year average for the combined capitals due to rising demand and an unseasonal weak flow of new listings since spring 2022,” she said. “However, the tide is changing, as the flow of new listings improves, likely spurred by the persistent pricing recovery or homeowners selling due to the higher debt costs.
“In Sydney, Melbourne, Canberra and Darwin, new listings are higher than the five-year average – a massive shift that could help to rebalance the demand and supply equation if this trend continues.”
Nicolas Hoo, from Marshall White Port Phillip in Melbourne, agreed, saying he’s seen listings rise in recent months and expects to see more as many sellers prepare for the spring property season.
“It’s been relatively positive in the suburbs I work in. It’s a combination of the spring seasons and seller confidence bringing sellers back to the market,” Hoo said.
Powell said these coming winter months could make for good conditions to sell and beat the upcoming spring selling competition.
“Conditions are good to sell, listings are weak, we’ve got good auction outcomes – the capital cities clearance rates were over 70% for the first time since October 2021,” she said.
Powell said a continuing price and listing growth trend could potentially create a positive sentiment to consumers and bring sellers back to the housing market, Domain reported.
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