Australia’s property market fully recovered from the downturn, national house price nears $1.1 million
Australia’s property market has officially fully recovered from the 2022 downturn, with new data revealing that the national median house price has reached a new high of $1,094,539.
Domain’s latest quarterly House Price Report, released on Wednesday, shows Sydney, Brisbane, Adelaide, and Perth have reached new house price peaks, returning to pandemic boom highs.
Sydney and Brisbane had a speedy recovery after 2022’s short and sharp downturn. Adelaide and Perth escaped the housing downturn altogether and have continued to chalk up new price records.
House prices rose across most capital cities over the December quarter of last year. Canberra and Darwin were the only cities where prices fell, by 3.5 per cent and 1.2 per cent, respectively.
Domain chief of research and economics Dr Nicola Powell says the recovery began when the supply of new property listings on the market shrivelled up last year. At the time, buyers hesitated to sell their homes in an environment of rising interest rates.
The dearth of listings created by that seller hesitance created strong competition between buyers, Dr Powell says, and pushed up prices despite high interest rates.
Over the past 12 months, house prices have risen by 12.7 per cent in Adelaide, 10.6 per cent in Sydney, 9.7 per cent in Brisbane and 11.9 per cent in Perth.
Powell says frustrated buyers should note that the rate of price growth has begun to ease.
“It was a strong start to the recovery, but what we saw as we went into late winter and into spring is listings rose,” she says.
“We saw a higher level of auction numbers. We saw a stronger influx of new listings coming on, and that helped to ease some pressure among potential buyers and buyers knew there was a little more choice,” she says.
Sydney’s house price median is now just $5000 short of hitting $1.6 million, and Powell says it’s likely the market will achieve this in the first quarter of 2024.
Units have picked up pace and now are only $12,000 away from recovering what was lost during the downturn.
Elliot Placks of Ray White Double Bay says lengthy construction times had already contributed to pushing up prices and will continue to do so.
“It’s incentivising people to trade finished products or to pay a premium for a larger property without having to go through the effort or emotion of doing a significant build or renovation,” he says.
While price growth is easing, Placks attributes it primarily to interest rates slowing down the economy and expects the market to hit a pause period.
“History repeats itself. If you look at every cycle where there’s been a boom and a strong price growth, then there’s a period of pause, not such a rapid growth and not such a rapid fall, but more of a pause. And I think we’ll probably go through that,” he says.
Brisbane’s recovery from the downturn has been remarkable, bouncing back from its steepest house price decline in a decade only 12 months ago to smashing records across house and unit prices.
And Powell says it’s likely the steep gains Brisbane has made over the past year are not done yet: “[Brisbane house and unit prices] are still going to rise,” she says.
“Units have come off a very long period of underperformance because they’ve had such a heightened level of supply. It’s been really the hero days for units in Brisbane over the last couple of years.”
James Curtain of Place Estate Woolloongabba says Brisbane and south-east Queensland are heading into the “golden decade” of real estate performance.
Powell and Curtain agree the price growth is attributed to three things: lack of supply, affordability compared to other major cities like Sydney, and the strong demographic trends created in preparation for the upcoming Olympics.
“While the Olympics is the hero, it is the momentum that’s built in the lead-up that creates greater rates of price growth and greater levels of housing demand because of the job creation. What that creates is an opportunity for people to relocate,” says Powell.
Curtain adds that the unit market has seen phenomenal growth as more young people turn to apartments to enter the market, with many of them having been priced out of entry-level houses.
“I think if you can buy, you do buy, and that’s what’s happening in Brisbane,” he says.
Perth and Adelaide housing markets are the gifts that keep giving to home owners as both capital cities continue to set price records.
Powell forecasts that prices for these two cities will still rise.
“Adelaide and Perth, they are the tall poppies in that they still have – particularly Perth – strong demographic tailwinds that are continuing to support demand,” she says.
“Perth, in particular, was the best-performing capital city for house prices over the December quarter, and we have seen momentum build in Perth.”
Canberra house prices fell during the December quarter by 3.5 per cent, reversing all the growth gained in the previous quarter.
“Canberra doesn’t know if it’s coming or going at the moment,” says Powell. “It’s really trying to find a price trough. I do expect Canberra to find a price trough and eventually start to increase.”
However, Canberra units have fully recovered from the downturn. After four consecutive quarters of growth, the new price peak now sits at $625,597.
Melbourne’s house price recovery has been slower than that of some of the other capital cities. It grew by just 0.9 per cent in the December quarter and has so far recouped $25,000 of the $75,000 lost during the downturn.
Unit prices increased by 1.6 per cent and have recovered almost $42,000 of the $63,000 value lost.
Powell forecasts an ease of growth in the property market for the coming year.
“What we might see over the first three quarters is actually slower rates of growth. Hitting 1 to 2 per cent each quarter,” she says.
“Once we start to see the cash rate being cut, we’re likely to see greater levels of housing market activity that may spark greater momentum and, therefore, higher rates of price growth.”
“It might start to see slightly different dynamics simmering from the housing market once we get to that later part of 2024.”
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