Australian house prices surged for the sixth consecutive quarter, setting new records in major cities like Sydney, Brisbane, Adelaide, and Perth, according to Domain’s latest analysis.
Despite economic pressures, high interest rates, and low consumer sentiment, the housing market resilience continues to shine. Dr. Nicola Powell, Domain’s chief of research and economics, noted that the market’s strength is supported by a 7% annual rise in homes on the market, which has bolstered sellers’ confidence.
Read Also: Government Energy Rebate $300 to Lower Household Electricity Bills From July 01
“The housing market remains resilient despite low consumer sentiment, economic pressures and high interest rates,” Dr. Powell said.
Key Factors Driving Demand
The demand in the housing market is largely driven by two groups: those leveraging existing property equity and buyers supported by parental financial backing, often referred to as the ‘Bank of Mum and Dad’.
“These factors are likely to become stronger due to persistent price growth,” Dr. Powell explained.
Stratified median house prices
| Sydney | 1662,448 | 1641,333 | 1542,688 | 1.3% | 7.8% |
|---|---|---|---|---|---|
| Melbourne | 1068,805 | 1050,950 | 1032,096 | 1.7% | 3.6% |
| Brisbane | 976,464 | 938,856 | 835,654 | 4.0% | 16.9% |
| Adelaide | 929,972 | 906,352 | 801,691 | 2.6% | 16.0% |
| Canberra | 1041,432 | 1032,753 | 1033,066 | 0.8% | 0.8% |
| Perth | 852,240 | 799,804 | 688,250 | 6.6% | 23.8% |
| Hobart | 686,053 | 693,537 | 701,993 | −1.1% | −2.3% |
| Darwin | 585,047 | 584,472 | 648,274 | 0.1% | −9.8% |
| Combined capitals | 1154,394 | 1127,516 | 1052,530 | 2.4% | 9.7% |
Supply Constraints
A significant issue contributing to rising prices is the ongoing lack of supply. “Supply still remains constrained overall, weighed against a surge in demand from strong population growth and a tight rental market,” Dr. Powell added.
Australia’s housing supply is struggling to keep pace, evidenced by a noticeable gap between new house completions and commencements. According to JP Morgan researcher Tom Kennedy, this divergence is unusual and suggests an increase in abandoned housing projects or other issues within the construction industry.
“The [2020] surge in commencements was expected to lead an upturn in new dwelling completions,” Kennedy said. “To date this dynamic hasn’t played out, with completions remaining low in the range.”
Read Also: Adelaide New Tallest Skyline with Keystone Tower Nearing Approval
Slowing Growth Rates
While house and unit prices have continued to rise for six and five straight quarters respectively, the pace of growth is decelerating compared to last year. The slowdown is more pronounced for units, which grew at a rate more than four times slower than the previous quarter, marking the weakest outcome since early 2023, according to the Domain report.
“It has led to a slowdown in annual gains for the first time this growth cycle for both combined capital house and unit prices,” the report stated.
Conclusion
In conclusion, Australia’s housing market continues to show remarkable resilience amidst various economic challenges. However, ongoing supply issues and slowing growth rates suggest a complex landscape for buyers and sellers alike.
