Home prices are rising despite higher interest rates and an increase in listings on the market. They are now at their peak in half the regions in our country.
According to PropTrack's June Home Price Index, national home prices are now 10% higher than their December 2022 low and 7% higher over the past year, following 18 consecutive months of growth.
A number of demand and supply factors have been driving this upturn in prices.
Strong population growth, challenging rental market conditions and recent home equity gains have contributed to heightened levels of demand. Although borrowing capacities are lower compared to previous years, recent stabilisation in interest rates has bolstered confidence for buyers.
Home prices are at a new peak after 18 months of consecutive growth. Picture: Getty
Not only is demand high but supply is constrained due to a chronic shortage of new home construction. In New South Wales, Queensland and Western Australia, population growth well outpaced the rate of new home completions in 2023.
Total listings in Perth and Adelaide also experienced large yearly declines.
These trends are pushing prices higher and causing home prices to hit their peak. In 44 SA4 regions, which reflects half of all regions in the country, home prices were at new historic highs in June.
SA4 regions are areas defined by the Australian Bureau of Statistics as regions where people both live and work, and generally have populations between 100,000 and 500,000.
Source: PropTrack. As of June 2024.
Home prices in most SA4 regions in Sydney rose to a new peak in June with the exceptions of the Central Coast, Northern Beaches and Baulkham Hills and Hawkesbury. In contrast, just four regional NSW SA4s rose to a peak, with many still below their 2022 peak.
All of Brisbane and most Regional QLD regions saw their home prices climb to a new high, reflecting the strength of the market in our third largest state.
Prices in all Perth and Adelaide SA4s hit new peaks, while just half of the SA4s in their regional areas experienced the same trend.
In these areas, price growth has been stronger because demand continues to outpace the level of available supply.
More insights from the expert team at PropTrack
In Victoria, where the rate of new home construction has broadly kept up with population growth and total listings have risen more than most states, prices are still below their 2022 peaks.
The number of new homes being built in both Tasmania and the ACT are exceeding the levels of population growth which may be contributing to their weaker price growth.
While home price growth has slowed, we anticipate continued price increases as demand persists and supply remains tight. However, the performance of each state is expected to vary, with more affordable regions likely to see stronger growth.
Megan Lieu, Economic Analyst at REA Group
Economic Analyst at REA Group
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