By.Emily Hutchinson, Rent Specialist and Property Journalist
1 Mar 2023
New data shows national home prices are on the rise as the downturn loses momentum amid low supply and consistent buyer demand.
February’s PropTrack Home Price Index shows home prices were up 0.18% across the country with price growth in every capital city except Hobart.
While home values have decreased from their peak in most markets, nationally prices are 29.4% higher than pre-pandemic levels.
Senior PropTrack economist, Eleanor Creagh, said the recent uptick in prices is a result of lack of supply.
“While activity in the housing market has fallen as interest rates have quickly risen, the limited stock available for sale has led to a pickup in competition among potential buyers insulating home values.”
Despite the latest data showing signs of recovery, Ms Creagh said it’s too early to call the end of the downturn.
“While interest rates have been the primary driver of home price falls to date, there are factors beyond interest rates at play. Sellers in market are now benefitting from low competition with other vendors, as buyers vie for available stock.
“The constrained level of properties available for sale is putting a floor under home prices and has concentrated buyer demand,” she said.
Ms Creagh added that there is an expected 25bp rate rise to come in March, which would take the cash rate to 3.60%, further lowering the borrowing capacities of many buyers.
“However, if supply remains limited, this will help counter the downward pressure on home prices,” she said.
Sydney home prices increased for the second month in a row, with February’s 0.36% rise following a 0.26% increase in January. Sydney’s prices have declined 6.64% in the past year, but remain 22.2% higher than pre-pandemic levels.
In Brisbane, prices were up 0.12% in February, following a very slight uptick of 0.02% a month earlier. Prices in the city are now 3.49% below their peak recorded in April 2022.
Meanwhile, the price correction in Melbourne stalled in February, with prices growing 0.18%. While prices in the city are now 6.09% below their peak, they remain 13.9% higher than in March 2020.
However, it was Adelaide that saw the biggest home price growth of 0.44% in February.
Director of Ray White Adelaide City, Andrew Downing said that since Covid, he has seen many interstate settlers and international expats move to Adelaide, along with strong investor interest.
“More recently, interstate investors have been really strong in the CBD, especially in the lower price brackets of $400,000-$600,000 who want to start a portfolio over here,” he said.
Perth’s home prices increased by 0.13% in February to a median of $565,000.
“This relatively affordable capital has held up better than most capitals over the past year, with prices increasing 2.49% to now sit just 0.24% below peak levels recorded last year. Potential buyer demand per listing is also at a record high,” said Ms Creagh.
The ACT saw no change in price in February, and remained 5.88% below its peak in March 2022. Similarly, Darwin saw little change in price with a 0.04% increase.
Hobart was the only capital city to drop in home value by 0.29%, which is 4.09% below the peak reached in April 2022, however the pace of these price declines have slowed since June and July last year when interest rates first started rising.