Capital cities make a comeback in Housing Market

Home prices went up in most parts of Australia in June, with the only exception being Hobart, where prices dipped slightly.

Over the April to June period, prices across the country increased by 1.4%. That’s a stronger result than the first three months of the year, and a clear improvement from the small drop at the end of last year. Every major city and regional area saw price increases—except for Regional Tasmania, where prices fell by 0.4%.

According to CoreLogic’s research director, Tim Lawless, one major reason for the rising prices is the recent cuts to interest rates. “When interest rates were first lowered in February, we saw a real shift. Another cut in May, and expectations of more to come, have made people more confident about the housing market,” he explained.

Even though prices are going up, the increase isn’t as fast as it was in mid-2023 or during the pandemic. Back then, home values were rising at a much higher pace.

Sales activity is still a bit quiet. The number of homes being sold is slightly below the usual average for the past ten years. At the same time, there aren’t a lot of homes listed for sale either. Compared to the same time last year, listings are down by almost 6%, and 17% lower than the five-year average.

This mix of slightly lower buyer demand and fewer homes for sale has created a fairly balanced market. One sign of better market conditions is auction success rates, which are now a bit higher than average—about 65% of homes going to auction are selling.

In June, home prices in capital cities grew faster than in regional areas for the second month in a row. However, looking at the whole quarter, regional areas still had a slight edge (1.6% vs. 1.4%).

Darwin saw the biggest increase in home values over the quarter, rising 4.9%. In fact, Darwin’s home prices are now at a record high, finally passing the peak seen back in 2014. Perth and Brisbane also did well, continuing their strong performance over the past five years.

For the full financial year, home values across the country rose by 3.4%. But since prices have been climbing steadily over the past five months, that figure is expected to go even higher in the second half of the year.

If current trends continue, yearly growth could reach around 5.8%, which is slightly above the average for the past decade.

Mr. Lawless added, “With interest rates likely to drop more, home prices could go up even further in the next 12 months. But high prices may still make it hard for some people to afford to buy, which could slow down how fast the market grows.”