CoreLogic’s Home Value Index (HVI) released today revealed median dwelling prices in Australia rose 0.4% in January.
Following 12 straight months of gains, the median property price Down Under stood at $759,437 as of 31 January.
Properties across the nation now sell 8.7% higher than last year, with Perth (16.7%), Brisbane (14.8%), Sydney (11.4%), and Adelaide (10.3%) posting the biggest annual growth.
Home values in Perth, Adelaide, and Brisbane continued to rise at a monthly rate of at least 1%.
CoreLogic research director Tim Lawless attributed the steady upswing in property prices to unabating demand driven by overseas migration and the ongoing rental crisis.
“Despite ongoing cost of living pressures, high interest rates, low consumer sentiment, and affordability constraints, homes are still selling,” he said.
“Housing demand has been buoyed by high migration, but also tight rental markets that have probably incentivised renters to transition towards homeownership if they can afford to do so.”
According to CoreLogic estimates, there were 115,241 dwellings sold over the three months to January,
Beneath a generally positive trend, the housing market around the country remained diverse.
Melbourne (down 0.1%), Hobart (down 0.7%), and Canberra (0.2%) posted subtle declines over the month, while Sydney (0.2%) and Darwin (0.3%) recorded nominal gains.
Perth properties continue strong performance
Perth remains the top-performing capital for property price growth with its persistently rapid rate of gains.
“The western capital continues to see housing demand outweigh supply, helping to push values 16.7% higher over the past 12 months,” Mr Lawless said.
Six SA3 areas, led by Armadale in the southeast and Rockingham in the southwest, posted the biggest leap in prices, increasing by more than 20% over the past year.
Despite accelerating home values, Mr Lawless said Perth properties “remain relatively affordable” compared with most capital cities, with median dwelling value sitting just under $677,000.
Sydney leads the pack of the most expensive housing prices, with a median value hitting past the $1 million mark.
Experts expect Perth will continue to lead Australia’s housing market with more years of huge gains driving competition among potential homeowners.
House and unit price gap widens
Australians appear to be favoring houses over units, as the price gap between two property types expanded to a record-high 45.2% in January.
Capital city house values have surged 11% since the commencement of the upswing, while unit prices have risen 6.9%.
Across the combined capitals, detached housing values rose by half a percent over the month, translating to around $4,800 lift in median house value. Units increased a smaller 0.1% or equivalent to a $900 price increase.
“It seems that most Australians are willing to pay a higher premium than ever for a detached home,” Mr Lawless noted.
Rental yields also up
Landlords in Perth and regional WA saw higher yields as the state led the pace of rental growth over the rolling quarter.
Units in Perth were renting at 3.7% higher than the previous quarter, while regional WA house rents were up 3.6% followed by Perth houses at 3.5%.
Nationally, rents increased 0.8% in January, the strongest monthly rise since April. All capital cities, except Darwin, posted gains over the quarter.
“Most years see rental growth accelerating through the March quarter as competition from students and new year leases adds to rental demand. It’s looking like we will see a similar trend this year with the usual pattern of higher rental growth emerging in January,” Mr Lawless said.
A stronger preference for houses was also noted among renters this quarter, with house rents rising faster at 2.5% compared with the 1.4% lift in unit rents across combined capitals.
Mr Lawless said the slowdown in unit rental growth coincided with “what has likely been a peak in net overseas migration” in the middle of last year, particularly in Sydney and Melbourne.
“With migration expected to ease from record highs last year, we could see a further moderation in upwards pressure on unit rents.”
Consumer confidence key to housing market activity
The research experts at CoreLogic said buyer confidence, along with other key factors, would greatly influence housing prices throughout this year.
“Historically, there has been a strong correlation between consumer confidence and home purchasing activity,” Mr Lawless said.
“Although this relationship has diverged a little in 2023, which is probably attributable to high migration and unusually tight rental conditions, any lift in consumer attitudes should play out positively for housing market activity.”
A rate cut from its current peak is seen to boost housing demand, which has been influenced by high interest costs and limited borrowing capacity
The ABS on Wednesday revealed CPI in the December quarter fell faster than expected, deepening expectations that the cash rate will be lowered towards the end of the year.
“The more inflation comes in under expectations, the firmer the case for interest rates remaining on hold next week, and coming down later this year,” CoreLogic head of research Eliza Owen said.
“It's likely the lower-than-forecast inflation outcome for the December quarter, alongside a growing expectation of rate cuts later this year will help to lift consumer attitudes.
“If that is the case, we should expect housing activity to follow suit later this year.”
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