House prices continue meteoric rise

Property price growth continues to accelerate across the country, with median values rising at their fastest pace in more than three decades in March.

CoreLogic’s monthly look at house prices showed a 2.8 per cent gain across all markets in March, the fastest rise in value since October 1998.

Sydney was the market leader, with values rising by 3.7 per cent for the month, contributing to a 6.7 per cent quarterly gain. 

Regional markets also performed strongly in NSW, with median values up 2.8 per cent in March, CoreLogic said.

Melbourne and Brisbane house prices rose by 2.4 per cent in March, while Hobart recorded a gain of 3.3 per cent to its median value.

Perth and Adelaide home values rose by 1.8 per cent and 1.5 per cent, respectively, in March, CoreLogic said.

CoreLogic research director Tim Lawless said the Sydney and Melbourne markets had now recovered fully from the downturns of recent years, with Sydney values now 2.6 per cent higher than their July 2017 peak, and Melbourne values setting a record high in March following a 5.9 per cent drop in 2020 due to COVID-19.

“Additionally, for the first time in a year, growth in capital city housing values outpaced the regional markets,” Mr Lawless said.

“CoreLogic’s combined capital cities index recorded a 2.8 per cent gain in March, compared to a 2.5 per cent lift in regional markets.

“Housing values in regional areas are 11.4 per cent higher over the past year, demonstrating the earlier stronger growth trend.

“Capital city values are now 4.8 per cent higher on an annual basis, with the acceleration in growth evident in March.”

Mr Lawless said unit markets had also turned a corner in March, although lower density housing still outpaced multi-residential dwellings for capital gains.

Detached house values were up 3 per cent for the month, while unit values were up 1.9 per cent.

“Despite the underperformance, unit markets have turned a corner, with Sydney recording two consecutive months of rising values, while the Melbourne unit market has seen values consistently rising since October last year, with the trend accelerating over recent months,” Mr Lawless said. 

While sales markets uniformly exhibited growth in March, rental markets continued to diverge.

Darwin and Perth remain the hardest markets for tenants to find a property, with rents rising at a record-setting pace in both cities, up 5.9 per cent and 7.7 per cent, respectively, for the quarter.

“Rental prices in Perth and Darwin started surging higher in September last year,” Mr Lawless said.

“The monthly growth in rents across Perth quickly accelerated from an already high 1.1 per cent in September 2020 to 2 per cent by March 2021.

“Darwin rents have risen by an average 2.1 per cent per month for the past seven months, including a 2.4 per cent lift in March 2021.

“Both these markets have seen a recent history of low housing investment which has kept rental supply low at a time of rising demand.”

Rents in both cities, however, remain well below previous peaks, with Perth rents 16 per cent under their 2013 high, and Darwin’s 24.6 per cent under their previous high, recorded in 2014.

Mr Lawless said the data showed that unit markets in Sydney and Melbourne were beginning to stabilise after a long period of rental declines. 

“Sydney unit rents have posted a subtle rise over the past three months, while unit rents in Melbourne have held firm over the same period," he said.

“The improvement comes after a long running decline, however a material improvement in rental conditions is likely to be dependent on foreign students and visitors returning to shore up inner city unit rental demand.”