Perth still leading the pack as national property prices march on
Three capital cities continue to power the national property market, with prices rising again in January as the country's biggest urban centres languished by comparison.
National property prices have maintained their momentum, with Perth, Brisbane and Adelaide continuing to forge their own seemingly unstoppable path upwards.
Sydney clawed out a small gain for January according to the latest CoreLogic data released Thursday (1 February), while Melbourne, Canberra and Hobart lost some ground in a reflection of their respectively sluggish performance throughout 2023.
In Perth, where open homes across the city are being swamped by scores or even hundreds of prospective buyers, prices leapt another 1.6 per cent for the month.
By comparison, national dwelling values rose 0.4 per cent, just a quarter of the Perth’s pace of growth.
Eastern states buyers are picking off many properties in mid-priced and affordable suburbs before they even reach the general public, with one real estate agent telling API Magazine that they had instructions to advise interstate investors about a property as soon as they were approached by sellers.
Tim Lawless, Research Director, CoreLogic, identified Perth as a stand out among the capital cities for a persistently rapid rate of capital gains.
“The western capital continues to see housing demand outweigh supply, helping to push values 16.7 per cent higher over the past 12 months.
“Despite that, housing prices remain relatively affordable compared with most capital cities, with the median dwelling value sitting just under $677,000.”
PropTrack’s monthly analysis singled out Perth as the only capital city to record significant growth in the first month of 2024.
Angus Moore, Senior Economist, PropTrack, said Perth started 2024 the way it finished 2023; as the strongest performing property market around Australia.
“Supporting home prices, buyers in Perth are facing record-low choice.
“While affordability has declined significantly as interest rates have risen, WA remains the most affordable state across Australia, which is likely supporting prices as well.”
It was a very different story in Melbourne, where the total number of properties listed for sale has been sitting above the decade average since mid-winter.
Nerida Conisbee, Chief Economist, Ray White Group agreed that the softest markets continue to be Melbourne and regional Victoria.
“Population growth has increased post pandemic, particularly international migration, and this will be positive in 2024, however, it is likely the impact of tough pandemic restrictions continues to weigh on economic growth for the state,” she said.
The news wasn’t all downbeat in regard to capital growth, with the outlook for prices more robust in 2024.
“While Sydney saw a decline in price over the past two months, and Melbourne remains comparatively weak, it is likely we will see growth this year for both cities.
“The probability of a rate cut is now far higher than it was less than six weeks ago.
“If this does happen, it is likely to fuel price growth in not only our largest cities but also other parts of the country.”
Regional property rebounding
Regional Australia has been pegging back some of the median price gap that the capitals had accrued in 2023.
Regional markets are now showing a stronger trend in value growth relative to the capital cities. The combined regional index rose 1.2 per cent over the rolling quarter compared with a 1.0 per cent rise across the combined capitals index.
“While both the combined capitals and combined regional markets are losing momentum in the pace of value growth, the capital city trend has slowed more sharply, mostly due to the flattening of growth conditions in Melbourne and Sydney,” Mr Lawless said.
“Across the other states, regional WA, SA and Queensland continue to record a slower pace of growth relative to their capital city counterparts; these are also the three regional markets where dwelling values are at record highs.”
Property transactions are well up on this time last year.
Despite worsening housing affordability, the volume of home sales has held slightly above average over the past three months.
CoreLogic estimates there were 115,241 dwellings sold over the three months ending January; 11.9 per cent higher than the same period last year and 0.5 per cent above the previous five-year average for this time of the year.
“Despite ongoing cost of living pressures, high interest rates, low consumer sentiment and affordability constraints, homes are still selling. Housing demand has been buoyed by high migration, but also tight rental markets that have probably incentivised renters to transition towards home ownership if they can afford to do so,” Mr Lawless said
House values have continued rising at a faster rate relative to unit values in January, with the gap between the median capital city house and unit values rising to a record high of 45.2 per cent in January.
Across the combined capitals, detached housing values rose by half a percent over the month, adding the equivalent of around $4,800 to the median house value while units increased a smaller 0.1 per cent, equivalent to a $900 lift.
