Capital city house prices rise four times faster than last quarter as housing recovery gains momentum

Capital city house prices have risen almost four times faster in the June quarter than in the first three months of the year, a new report has found, producing the steepest gains since late 2021.

Domain’s latest House Price Report, released on Thursday, revealed Australia’s housing market recovery has not only continued but gained momentum.

The national median house price rose by 2.7 per cent in just three months, to $1,049,812, and every capital city bar Canberra – where prices have stabilised – has seen median house prices increase.

Despite fears of a long-lasting downturn driven by rapid interest rate hikes and inflationary pressures, house prices have now risen for two consecutive quarters, recouping about $35,000 of the $60,000 value lost during 2022.

The national unit price rose by 2.6 per cent to $608,898 – a sharp contrast to the March quarter, when unit prices actually fell by 0.4 per cent.

The news comes as no surprise for Domain chief of research and economics Dr Nicola Powell.

“I expected this strong rebound. I think overall, we’ll see a more steady rate of growth if listings continue to rise,” says Powell.

Sydney is leading the recovery with the greatest growth, already roughly two-thirds into its recovery. It has seen a 6.7 per cent growth after losing 9.5 per cent during the market downturn. 

“Sydney is probably going to be that anomaly, with a level of growth that isn’t sustainable against the backdrop of our current economic environment, but I don’t think prices will deteriorate; instead it’ll become steady as listings rise,” says Powell.

Property price increases and recovery have been felt across the nation, with Perth and Adelaide hitting price records. 

“I think both these cities are battling fewer affordability issues than the east coast. But there are also favourable demographic trends that are supporting [property] demand. Price points have also changed – in particular in Adelaide – dramatically since pre-pandemic, helping reach these new milestones during a recovery period,” Powell says.

Andrew Downing of Ray White Adelaide City credits this new milestone to the influx of east coast buyers during the pandemic period.

“[Adelaide] didn’t have any price drop-offs because we came from a lower, more affordable base and kept slowly moving ahead to a peak,” he says.

Demand for housing in Adelaide soared during and after the pandemic as out-of-staters fled tight lockdown restrictions, says Downing. Now the city has become a popular place to buy in.

“I think [Adelaide] reached a normal market, but there’s still a lot less listings in the market than you’d expect,” he says.

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Powell says that low supply of listings has helped push prices up in a period where the cash rate is at an 11-year high and borrowing power has been slashed. 

“The total number of homes for sale is 22 per cent below the five-year average for the combined capitals due to rising demand and an unseasonal weak flow of new listings since spring 2022. However, the tide is changing, as the flow of new listings improves, likely spurred by the persistent pricing recovery or homeowners selling due to the higher debt costs,” Powell says.

“In Sydney, Melbourne, Canberra and Darwin, new listings are higher than the five-year average – a massive shift that could help to rebalance the demand and supply equation if this trend continues.” 

Melbourne real estate agent Nicolas Hoo from Marshall White Port Phillip agrees. He’s seen listings go up in recent months and expects to see more as many sellers prepare for the spring property season.

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“It’s been relatively positive in the suburbs I work in. It’s a combination of the spring seasons and seller confidence bringing sellers back to the market,” Hoo says.

In the coming months, Powell advises that this quieter winter season could make for good conditions to sell and beat the upcoming spring selling competition. 

“Conditions are good to sell, listings are weak, we’ve got good auction outcomes–the capital cities clearance rates were over 70 per cent for the first time since October 2021,” she says.

If the price and listing growth trend continues, it’s likely to create a positive sentiment to consumers and the push sellers need to return to the housing market, says Powell.