In a remarkable display of market strength, Australian homeowners in key capitals have witnessed their property equity soar by over $100,000 in just the past year.
The PropTrack Home Price Index for March reveals a noteworthy trend: even with a surge in listings, property prices have not only held firm but reached new heights, underscoring the resilience and vitality of the Australian property market.
A nationwide phenomenon of rising values
Across Australia, home values edged up by 0.34% in March, with capital cities leading the way with a 0.4% increase.
This growth trajectory has propelled property prices to unprecedented levels, building on the gains observed in the previous month.
Sydney, our priciest city, has seen a staggering 8.61% increase in house prices over the year, lifting the median house value to $1.369 million—a jump of roughly $111,000.
Perth, Brisbane, and Adelaide are also celebrating record highs, with Perth houses now averaging $707,000, up by about $100,000 from last year.
This upward trend isn't just confined to Sydney.
Brisbane and Adelaide homeowners have seen their median house prices climb by approximately $96,000 and $78,000, respectively.
Eleanor Creagh, Senior Economist at PropTrack, notes that this robust demand, amidst increasing property listings, is fuelling the price hike.
The underlying factor?
A significant mismatch between supply and demand is increased by the higher interest rate environment and affordability concerns.
"Despite more homes coming onto the market this year, demand has continued to outstrip supply, leading to further price increases," explains Ms Creagh.
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Interest rates and market expectations
While the Reserve Bank held interest rates steady last month, the market is buzzing with anticipation of potential rate cuts as early as September.
Such a move could increase home-buying activity, expanding budgets and boosting confidence.
"The expectation of lowering interest rates towards late 2024 is keeping buyer and seller confidence buoyant," Ms Creagh adds.
"We're likely to see further price uplifts in the coming months, especially with the prevailing sentiment that rates will decline in the second half of 2024."
In other words, we can expect a robust spring market, especially in blue-chip areas.
A closer look at capital cities
In Perth, which recorded a significant 0.99% increase in home prices in March, the growth is remarkable – the strongest since records began in 2010.
This surge in Perth, accompanied by similar trends in Adelaide and Brisbane, is largely due to the relative affordability, population growth, and tight rental markets.
In Canberra, there's an emerging recovery, with a 0.67% increase in March, marking its strongest growth since February.
Melbourne, too, is gaining momentum with a 1.71% annual growth.
Interestingly, the unit market has seen a quicker pace of growth than houses in early 2024, likely driven by the affordability factor and a resurgence in demand for inner-city living post-pandemic.
In conclusion...
What we're witnessing is a market that's remarkably resilient, buoyed by a combination of low supply, strong demand, and evolving buyer expectations.
While challenges remain, the Australian property market continues to be a dynamic landscape, ripe with opportunities for both homeowners and investors.
