Property prices shooting up again as Perth soars, Melbourne reverses slide

Perth’s property market is going gangbusters, Melbourne has emerged from a three month slump, and Hobart stands alone as the country’s only capital going backwards.

These were among the revelations in the latest data releases from the major property market analysts.

Nationally, property prices in the capitals and regions alike were 0.6 per cent higher in February, up from 0.4 per cent the previous month.

CoreLogic’s Home Value Index for February has Perth on track to record growth in 2024 of more than 20 per cent at its current rate of knots.

Dwelling values shot up 1.8 per cent, ahead of the other reliably strong deliverers of capital growth, Adelaide (1.1 per cent) and Brisbane (0.9 per cent).

Sydney’s median property price of $1,128,155 belittles the rest of the country but speculation that the Harbour City’s lack of affordability would result in an inevitable price decline seems premature.

Steady growth of 0.5 per cent eclipsed its southern neighbour, but Melbourne’s 0.1 per cent monthly increase put an end to three months of continuous price falls. The Victorian capital has a median value of $778,941, fourth among the capitals behind Sydney, Canberra and Brisbane.

Adelaide’s continued strong performance, up 1.1 per cent for February, has seen its median dwelling value claw its way to within $50,000 of Melbourne’s.

Buoyed by a lack of supply and abundance of interstate investors, Perth’s real estate juggernaut is showing no signs of slowing.

Speaking to API Magazine, Julie Kelley, Global Sales and Marketing Manager for aussieproperty.com, said every indicator pointed towards continued growth and a possible acceleration as the year unfolded.

“Perth is not showing any signs of a slowdown, with population growth, housing supply shortages and high rents driving the capital growth.

“The east coast investor contingent is also hungrily purchasing property at rates we haven’t seen since the mining boom of the 2000s.

“These savvy buyers recognise Perth is extremely affordable, offers high rental yields, sub-1 per cent vacancy rates, has a strong economy, and the fastest housing value growth nationally.”

Perth’s median property price of $687,004 is narrowly ahead of Hobart’s ($652,645) and sits only above Darwin’s $500,000 among the rest of the capitals. The Western Australian capital’s rental crisis is as severe as anywhere in the country, with a vacancy rate of just 0.4 per cent (with 2-3 per cent regarded as a balanced market).

Ms Kelley said that in an attempt to accelerate residential land developments in Perth, the state government is slashing red tape and introducing initiatives to create more supply.

“The government is trying but we are still years away from housing and rental supply correction, so we can expect prices to continue to rise at the hasty rates we are experiencing now.

“I would not be at all surprised to see month-on-month growth above 2 per cent at some point this year.”

The city’s southern coastal suburbs were performing particularly strongly.

CoreLogic’s Research Director, Tim Lawless, agreed that Perth’s runaway property market had few inhibitors.

“The underlying fundamentals of the WA housing market look set to continue for some time, with Perth and parts of regional WA continuing to show an affordability advantage alongside solid demand from high levels of interstate and overseas migration.

“With substantially higher rental yields and prospects for capital gains, WA is likely to be a favourite among investors.”

Renters struggling to find properties amid rapidly rising rents have little cause for optimism.

“Similar to the trend in housing values, Perth stands out among the capital cities with a substantially faster rate of rental growth that is showing little evidence of slowing down,” Mr Lawless said.

“The same underlying factors that are rapidly pushing home values higher across Perth are at play in the rental sector, with demand substantially outweighing supply, keeping rental growth well above average levels.”

On a national scale, the slowdown in home price growth recorded toward the end of 2023 has reversed this year, with prices hitting a new peak in February.

According to PropTrack, national home prices lifted 0.45 per cent to hit a new record in February, marking the largest monthly rise since October 2023.

Eleanor Creagh Senior Economist, PropTrack, said more homes have hit the market this year, but demand has kept up with that increase. She said prices would keep rising in 2024.

“The expectation that interest rates will fall in the second half of 2024 is likely providing a positive tailwind for activity.

“Housing demand is also being buoyed by population growth, tight rental markets, resilient labour market conditions and recent home equity gains and meanwhile, the sharp rise in construction costs and labour and materials shortages have slowed the delivery of new builds, hampering the supply of new housing.

“Looking ahead, the positive tailwinds for housing demand and a slowdown in the completion of new homes are likely to offset the impact of reduced affordability and a slowing economy.

“As a result, prices are expected to lift further in the months ahead,” Ms Creagh said.

Brisbane’s hot market and hotspots

On an annual basis, Perth is only narrowly ahead of Brisbane, with prices up 18.3 and 15.6 per cent respectively, according to CoreLogic.

Ms Creagh said Brisbane has been one of the strongest-performing markets since the pandemic onset, with prices up 60.7 per cent since March 2020, according to PropTrack data, putting dwelling values on par with Melbourne.

Ms Kelley of aussieproperty.com said Brisbane’s 2024 fortunes would be buoyant throughout 2024, driven by the many of the same variables as the West’s hot market, namely population growth, interstate migration and housing supply shortages.

“The Brisbane market experienced exceptional house price growth through Covid, so I don’t anticipate Brisbane overtaking Perth this year in terms of month-on-month capital growth, however, Brisbane and Perth will still continue to dominate the top spots this year.

“I would be surprised if Brisbane’s house growth over the coming 12 months was in the double figures but it will perform solidly.”

Ms Kelley identified a clutch of suburbs that were well positioned to generate higher capital growth than the wider city average.

“Our investor clientele are still attracted to the inner city and middle-ring suburbs of Brisbane and prefer homes and townhouses over apartments and house and land packages in outskirt locations.

“Investors are typically shopping in the $1 million to $1.5 million price range knowing they may need to increase their budgets for quality properties.

“The suburbs of Camp Hill, Holland Park, Carindale, Carina and Carina Heights are in high demand.

“Our clients that are searching for homes in which to live generally have high budgets in excess of $2 million and have preferences closer to the city, such as Highgate Hill, Paddington, Hawthorne, Hamilton, Bulimba and St Lucia.”