The PropTrack Home Price Index shows that home prices in July continued to recover. July marked the seventh consecutive month of national home price growth, reversing much of the falls recorded over 2022, with national home prices returning to positive annual growth to sit 1.36% higher than a year ago.
National home prices increased 0.16% in July, marking the seventh consecutive month of increases.
This continued lift means prices nationally have grown 2.79% since December, reversing the majority of the decline seen in 2022.
This year’s continued recovery has brought national annual price growth back to positive, with prices up 1.36% compared to a year ago and just 1.44% below the March 2022 peak.
While interest rates were the primary driver of home price falls seen for much of 2022, there are other factors like the supply of properties for sale, labour market conditions, rate of immigration, home building, 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.
Stronger housing demand and a limited flow of new listings hitting the market have offset the impact of substantial interest rate rises that have been pushed through since May 2022.
Stronger housing demand is being bolstered by the rebound in net overseas migration, tight rental markets amid shortages in rental supply and ongoing labour market tightness, with wages growth increasing slowly and the unemployment rate holding at a multi-decade low of 3.5%. 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.
Regional areas have seen a slower pace of growth in 2023 compared to capital cities, and that continued in July.
Prices regionally fell 0.03% month-on-month in July while capital city prices lifted 0.23%. With the exception of regional Tasmania, capital city markets outperformed their regional counterparts on a monthly basis in every state in July.
However, regional markets outperformed capital city markets throughout much of the last year and have still recorded a smaller decline from peak levels, given regional prices held up better for much of 2022.
All capitals, except Darwin (-0.08%) and Canberra (-0.02%), saw prices rise in July. Adelaide (+0.62%) led gains through the month, followed by Brisbane (+0.37%).
Home prices in Brisbane rose 0.37% in July to hit a new price peak. After rising for seven consecutive months, Brisbane has now regained 2022’s price falls in entirety and prices are 1.98% higher than a year ago.
Sydney home prices continue to lead the recovery, after leading the downturn in 2022. Sydney home prices have increased for eight straight months, and increased a further 0.28% in July. That means home prices are now up 5.26% from their trough in November last year, and just 2.22% below the February 2022 peak.
Prices are similarly recovering in Melbourne, with home prices in Melbourne now up 0.97% from a low in January of this year. Melbourne's recovery has not been nearly as sharp as Sydney, though it did not see as large a decline in 2022. As a result, prices in Melbourne are still 4.91% lower than the March 2022 peak and 1.30% lower than a year ago.
Adelaide, Perth and regional SA and WA continue to be the strongest performing housing markets over the past year, with prices well up in all four markets compared to a year ago.
Adelaide and Perth bucked the price falls seen in most markets in 2022 and are the strongest capital city markets over the past year, with prices at fresh record highs in both markets.
At the other end of the spectrum, Hobart remains the weakest performing market when comparing annual price growth and change from peak, with prices now down 6.60% from the March 2022 peak despite rising 0.21% in July.
However, this comes after several years of outperformance as well as strong growth during the pandemic. Home prices in Hobart are still up 38.3% since March 2020.
Prices for detached houses nationally grew 0.14% in the month, while unit prices grew 0.24%. Unit prices have grown more quickly over the past year and are now 2.09% higher than a year ago, while house prices are up 1.21%.
Markets in parts of regional Queensland, WA and SA regions continued to be 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 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 July marked the seventh consecutive month of national home price growth, reversing much of the falls recorded over 2022.
Stronger housing demand and a limited flow of new listings hitting the market have offset the impact of interest rate rises that have continued this year.
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.
Although total stock on market has increased slightly, the flow of new listings has remained soft in recent months.
Given limited new stock is coming to market, buyer interest is being concentrated, leading to increased competition and solid selling conditions that are seeing prices continue to lift.
Seven months of price rises that have gathered traction across markets could also be drawing buyers off the sidelines.
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 the interest rate rise cycle reaching a 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.
However, interest rates are very likely nearing their peak, if not there already. This is likely to sustain confidence and maintain the lift in home prices into spring, 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 – July 2023’. See report for Copyright and Legal Disclaimers.