The PropTrack Home Price Index shows that national home prices jumped a further 0.28% in August as the spring selling season approaches.
August marked the eighth consecutive month of national home price growth, with national home prices having now regained the majority of 2022s price falls.
After falling 4.12% from March 2022 to December 2022 national prices are now up 3.51% from the low point recorded in December to sit just 0.75% off peak levels recorded in March 2022 and 2.64% higher than their year ago levels.
National home prices increased 0.27% in August, marking the eighth consecutive increase, the longest period of consecutive monthly growth since the pandemic boom which saw 23 consecutive months of growth from May 2020 to March 2022.
This continued lift means prices nationally have grown 3.51% since December 2022, reversing the majority of the decline seen in 2022.
This year’s recovery has brought national annual price growth back to positive, with prices up 2.64% on their year ago levels and just 0.75% below their March 2022 peak.
While interest rates were the primary driver of home price falls for much of 2022, there are other factors like labour market conditions, the rate of immigration, home building, the supply of properties for sale, state of rental markets and interstate and regional migration that all also affect home price growth, as well as how it is distributed across the country.
For much of this year, stronger housing demand and a limited flow of new listings hitting the market have offset the impact of the substantial 400 basis points in interest rate tightening that has been pushed through since May 2022.
Stronger housing demand is being bolstered by the rebound in net overseas migration, tight rental markets amidst shortages in rental supply and ongoing labour market tightness with slowly increasing wages growth and the unemployment rate holding close to multi-decade lows. Although total stock on market has increased slightly, the flow of new listings has remained soft in recent months, leading to increased buyer competition and solid selling conditions with prices continuing to lift.
In Sydney and Melbourne, increasing confidence amongst sellers has seen the flow of new listings picking up in July and August but strong home buying demand has caused prices continue to lift in August.
Choice for buyers remains limited in Brisbane, Adelaide and Perth, sustaining buyer competition and solid selling conditions with prices hitting fresh peaks in each of these markets in August.
Regional areas have seen a slower pace of growth in 2023 compared to capital cities, and that continued in August.
Prices regionally rose 0.09% month-on-month in August and capital city prices lifted 0.35%. Except for regional Northern Territory capital city markets outperformed their regional counterparts on a monthly basis in every state in August.
With capital city markets taking the lead in the 2023 home price recovery and regaining the majority of 2022’s price falls, regional markets have now seen a larger decline from peak despite prices holding up better for much of 2022. However, this comes after several years of outperformance and exceptionally strong growth during the pandemic. Home prices in regional areas are still up 47.6% since March 2020, whilst home prices in the combined capitals are up 29.2% over the same period.
All capitals, except Darwin (-0.38%), saw prices rise in August. Adelaide (+0.64%) led gains through the month, followed by Sydney (+0.47%).
Home prices in Brisbane rose for the eighth consecutive month in August, jumping 0.27% to hit a new price peak. Prices are now 4.19% above their levels a year ago and up 5.44% year to date.
Sydney leads the recovery, after leading the downturn in 2022. Sydney home prices have increased for nine straight months, and increased a further 0.47% in August. That means home prices are now up 6.19% from their trough in November last year, and are now just 1.29% below their February 2022 peak.
Prices are similarly recovering in Melbourne, with home prices in Melbourne now up 1.32% from their low in January of this year, though its recovery has not been nearly as sharp as Sydney (though it also did not see as large a decline in 2022, falling 5.81% from March 2022 to January 2023 compared to Sydney’s peak to trough decline of 7.04% from February 2022 to November 2022). As a result, prices in Melbourne are still 4.57% lower than their peak in March 2022 and 0.53% below their year ago levels.
Adelaide and Perth continue to be the strongest performing capital city markets over the past year, with prices up 7.41% and 7.57% respectively in both cities over the past year, with prices at fresh record highs in both markets. Brisbane follows as the third strongest capital city market comparing annual growth with Brisbane prices up 4.19% year-on-year in August 2023.
Regionally, regional South Australia (+10.53%) and regional Queensland (4.43%) are the strongest performing markets on an annual basis.
At the other end of the spectrum Hobart remains the weakest performing market when comparing annual price growth and change from peak, with prices down 6.52% from their March 2022 peak despite rising 0.27% in August. However, this comes after several years of outperformance as well as strong growth during the pandemic. Home prices in Hobart are still up 38.6% since March 2020.
Prices for detached houses nationally grew 0.25% in the month, while unit prices grew 0.42%. Unit prices have grown more quickly over the past year and are now 3.25% higher than a year ago, while house prices are up 2.52% on their year ago levels.
Markets in parts of SA, WA and regional Queensland were the top-performing areas over the past year, recording growth in prices of 8% or more over the past year. These markets have largely avoided the downturn in prices, due to a combination of factors: more affordable homes, heightened interstate migration during the pandemic, and – particularly for Perth – very low stock on market. In Perth, the total number of properties currently listed for sale is near record lows.
Within Sydney, inner city areas have had the strongest rebound in prices compared to a year ago, reversing the pattern seen earlier in the downturn, when more-affordable peripheral areas were holding up better.
The story is fairly similar in Melbourne, however prices in the inner Melbourne region have not performed as well as prices in the east, or, particularly, the inner east.
The recovery in prices across 2023 has continued and August marked the eighth consecutive month of national home price growth, reversing much of the falls recorded over 2022.
For much of this year, stronger housing demand and a limited flow of new listings hitting the market have offset the impact of interest rate rises.
Housing demand is stronger, likely bolstered by the strength in net overseas migration, as well as very tight rental markets. Further, the unemployment rate is close to a multi-decade low, promoting a sense of job security. Wages growth, while running behind inflation, has also increased. Eight months of price rises that have gathered traction across markets could also be drawing buyers off the sidelines.
In Sydney and Melbourne, increasing confidence amongst sellers has seen the flow of new listings picking up but strong demand has caused prices continue to lift in August. Choice for buyers remains limited in Brisbane, Adelaide, and Perth, sustaining buyer competition and solid selling conditions with prices hitting fresh peaks in each of these markets in August.
As the recovery has broadened, numerous metrics are reflecting the improvement in conditions. Sales volumes have increased, auction activity has strengthened, and auction clearance rates are holding firm.
Many buyers and sellers anchor expectations from recent momentum, which can embed trends in market, with buyers likely comforted by greater certainty around economic activity, continued low unemployment and talk of interest rates having reached their peak.
The full impact of recent rate rises is yet to be felt, and the potential for further tightening remains a headwind for the market.
As the volume of new listings coming to market continues to increase as the spring selling season unfolds, the pace at which prices have grown this year may slow. However, interest rates have stabilised in recent months and are very likely at peak. This is likely to sustain confidence and maintain the lift in home prices, resulting in more markets returning to positive annual price growth.
Methodology: The PropTrack Home Price Index measures the monthly change in residential property prices across Australia to provide a current view on property market performance and trends. PropTrack Home Price Index uses a hybrid methodology combining repeat sales with hedonic regression. The repeat sales method matches resales of the same property while the hedonic regression estimates values based on the value of similar properties. The hybrid model allows two properties in the same Australian Bureau of Statistics Statistical Area 1 (SA1) region, of the same type, to be matched and controls for differences in property characteristics, as in a hedonic regression. The PropTrack Home Price Index is a revisionary index with the whole back history updated monthly with current transaction information.
** This report uses realestate.com.au internal data and data sourced from third parties, including State government agencies. It is current as at the time of publication. This report provides general information only and is not intended to constitute any advice and should not be relied upon as doing so. If you wish to cite or refer to this report (or any findings or data contained in it) in any publication, please refer to the report as the ’PropTrack Home Price Index Report – August 2023’. See report for Copyright and Legal Disclaimers.