Property prices have had a lacklustre start to 2024 with most capital cities either slowing or going backwards.
But one of Australia’s most affordable capital cities has powered ahead, with values reaching a new record high in January.
The latest PropTrack Home Price Index showed the national median home value edged up just 0.02% last month, with the combined capital city median unchanged over the month.
A median-priced Australian home is now worth 5.26% more than a year ago, with prices rising over the past 12 months in most cities and some now at record highs.
But while growth in the capitals eased over January, Perth’s property market was the standout performer, with values surging further and building on the phenomenal price growth of 2023.
PropTrack economist Angus Moore said the national median value hasn’t moved much since November, with the latest interest rate rise and an increase in the number of homes on the market contributing to a slowdown in growth.
“After reasonably strong growth in the middle of 2023, prices have started 2024 more slowly, and momentum in prices has faded,” Mr Moore said.
While property prices rose throughout 2023, Mr Moore said higher interest rates have also reduced the amount households can borrow, causing price growth to stall.
“Strained affordability – which sits at its worst level in at least 30 years – is likely weighing on home prices,” he said.
“Nonetheless, we expect prices in 2024 will still grow, albeit at a slower pace than in 2023.”
Where prices rose, and where values went backwards
Jump ahead to see how prices performed in:
Prices in Australia’s two biggest cities, Sydney and Melbourne, fell fractionally in January, while values in Adelaide and Canberra declined a little.
Brisbane recorded price growth in January to reach a new high, although growth slowed compared to December.
But it was Perth that was once again had the strongest price growth in January, with values jumping 0.5%.
The Western Australian capital has the strongest property market of all the major cities, with values up 15.45% on an annual basis.
Outside the capitals, prices grew marginally, with regional Western Australia, South Australia and New South Wales posting the largest gains.
“While regional areas have very slightly outpaced capital cities over the past few months, capital city areas remain the stronger performer over the past year and a bit,” Mr Moore said.
How home prices changed around the country in January
Data released Wednesday showed a sharper-than-expected slowdown in inflation over the year to December, firming expectations that interest rates have already peaked.
“A more stable interest rate environment, coupled with ongoing population growth and a low level of new building activity, will support home price growth this year,” Mr Moore said.
Economists at the major banks expect the Reserve Bank will cut interest rates this year, with some forecasting a rate cut as early as June.
A reduction in interest rates would boost buyers’ borrowing capacities and ease affordability challenges, potentially helping push property prices higher, according to BresicWhitney chief executive Thomas McGlynn.
“Inflation does look to be under control,” he said. “That therefore will probably lead to the potential of an interest rate cut.”
“If interest rates do come down, buyers will be inclined to spend that little bit extra when they’re negotiation or buying at auction.”
Sydney
Sydney’s median home value declined for the second consecutive month, however prices have only fallen a little since reaching a new peak in November.
A median-priced Sydney home is now worth $1,057,000, declining 0.04% over January and sitting 0.25% lower than the previous high.
“While only modest falls – and amid lighter sales volumes due to the end-of-year break – the pace of home price growth has slowed compared to the middle of 2023,” Mr Moore said.
Sydney’s Northern Beaches and Eastern Suburbs had the city’s strongest property price growth over the past year. Picture: Getty
Rising listing volumes in Sydney had created more normal market conditions and given buyers more choice, Mr McGlynn said.
“At the back end of last year we did see a period where there was quite a considerable amount of properties in the market which is obviously going to have an effect,” he said.
“We have noticed we’re moving into more of a normalised market and what I think we’re going to see is periods where we have a slight decline and then we might have a slight increase in the next quarter.”
“I don’t think demand has petered off, I think people’s appetite for paying more than they want has petered off.”
Melbourne
The median home value in Melbourne declined 0.09% to $799,000 in January, which is still 4.72% below the pre-rate rise peak in March 2022.
Softness in the Melbourne property market has created more favourable conditions for property seekers.
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“Buyers in Melbourne have been enjoying more choice than has been true in many other parts of the country, with the total number of properties listed for sale sitting above the decade average since mid-winter,” Mr Moore said.
Brisbane
Property prices in Brisbane reached a new peak in January, rising 0.17% to a median value of $794,000.
Having risen 10.71% over the past year, Brisbane’s median home value is now just $5,000 below Melbourne’s.
With Brisbane prices reaching new highs and Melbourne’s market stagnating, values the two cities are almost on par. Picture: realestate.com.au/buy
“Brisbane has been one of the strongest-performing markets since the pandemic began, with prices up 58% since March 2020,” Mr Moore said.
Brisbane’s strongest growth on an annual basis has been concentrated in affordable suburbs in the city’s west and south, including Ipswich (up 13%), Logan – Beaudesert (up 12.9%) and Brisbane south (up 11.7%).
Perth
Property prices in Perth have never been higher, climbing 0.5% in January to a median value of $640,000.
“Perth has started 2024 the way it finished 2023: as the strongest performing property market around Australia,” Mr Moore said.
Strong population growth and record-low listing volumes have caused prices to rise faster than any other capital, supported by Perth’s relative affordability.
The city has also become a target for interstate investors chasing strong rental yields amid the high interest rate environment, with homes in some investor hotspots snapped up within days of hitting the market.
Perth’s south west is now the strongest performing region in Australia, with prices growing 18.44% in the past year. This home at 26A Blackwall Reach Parade, Bicton is on the market now. Picture: realestate.com.au/buy
White House Property Partners director Stefanie Dobro said the acute housing shortage in Perth was the key factor driving price growth.
“There’s no stock but things are turning over really quickly,” she said. “We’re selling regularly within a week of going to market.”
“Anything that’s well-priced with a wide target market is selling well.”
Ms Dobro said Perth’s strong population growth meant the housing shortage would persist until more homes were built.
A rise in multigenerational living arrangements such as granny flats could also free up family homes, Ms Dobro said, as could older homeowners moving into aged care.
Adelaide
Adelaide home prices declined by 0.13% in January after very strong performance in 2023.
Even so, prices are still up 10.52% over the past 12 months, making it the third-strongest performing city on an annual basis.
Adelaide values declined slightly in January, but are expected to pick up again later in the year. Picture: realestate.com.au/sold
Mr Moore said the easing in prices came amid lighter sales volumes in January due to the end-of-year break, and price growth would pick up again as the market kicked into gear.
“We expect Adelaide will continue its momentum from 2023 and be one of the stronger-performing cities, given its relative affordability,” Mr Moore said.
Hobart
Hobart recorded a small increase over January, with the median value rising 0.09%.
Prices in Hobart are sitting 8.13% below the peak, with the weakness in the market coming amid declining affordability in Tasmania and a large increase in properties for sale.
This hillside home with views over Hobert sold for $1.1 million last month. Picture: realestate.com.au/sold
“After being the strongest performing capital city for much of the pandemic and years prior, prices in Hobart have been trending downwards for close to two years, and it has been the weakest-performing market over the past year,” Mr Moore said.
Darwin
Darwin home prices declined 0.38% in January, with prices now 1.47% lower than this time last year.
“Unlike some of the larger capitals, home prices in Darwin have not reached their pre-rate-rise peak, sitting 2.19% lower than May 2022,” Mr Moore said.
Canberra
Property prices in the Australian capital fell 0.13% last month, with the city’s median value just above where it was this time last year.
However, prices are still 6.2% below the peak recorded in March 2022.
Despite lacklustre growth in 2023, Canberra’s median home value of $831,000 is the second highest of the capitals after Sydney.
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- Source: https://www.realestate.com.au/news/home-prices-stall-across-the-country-apart-from-one-affordable-capital-city/
