The PropTrack Home Price Index shows national home prices hit a new record high in March, lifting 0.34%. That brings prices up 1.57% so far this year to sit 6.79% above March 2023 levels.
2024 has kicked off busily and more homes have hit the market this year giving buyers more choice.
Demand has kept up with that increase, with many anticipating that interest rates will fall in late 2024 likely providing a positive tailwind for activity.
Housing demand buoyed by population growth, tight rental markets, resilient labour market conditions and home equity gains also remain in play, alongside the stable interest rate environment.
Meanwhile, the sharp rise in construction costs and labour and materials shortages have slowed the delivery of new builds, hampering the supply of new housing.
This imbalance between supply and demand is offsetting the higher interest rate environment and impact of affordability constraints with home prices continuing to lift.
Download the PropTrack Home Price Index - March 2024 report in full
National home prices increased 0.34% in March as the home price upturn remains in play.
Despite the increase in new listings hitting the market, buyer demand has kept up and although the pace of home price growth slowed through the holiday period, growth has reaccelerated with prices now up 1.57% so far this year to sit 6.79% above March 2023 levels.
Capital city markets led 2023’s price upturn whilst prices in regional areas were slower to recover.
This trend has continued in 2024 and although both the combined capital cities and regional areas saw prices lift in March, prices in the combined capital cities have outpaced regional areas year to date.
Home prices in the combined capital cities are up 1.67% year to date after climbing 0.40% in March to a fresh price peak, while prices in regional areas lifted 0.19% in March to also set a fresh record, now up 1.30% year to date and up 4.67% on March 2023 levels.
All capitals, except Hobart (-0.03%), saw prices rise in March.
Perth has maintained its streak of relative outperformance and was the strongest market in the country for monthly (+0.99%) and annual (+18.62%) home price growth. Prices surged 0.99% in March – the 20th consecutive month of growth – and are up 18.62% on March 2023 levels, the strongest pace of annual growth on records back to 2010.
After Perth, Canberra (+0.67%), Brisbane (+0.41%) and Sydney (+0.40%) saw the strongest growth and prices in all capitals bar Canberra set fresh records.
Prices lifted by a more modest 0.31% in Adelaide, 0.27% in Melbourne and 0.03% in Darwin, while price falls persisted in Hobart.
The smaller capitals continue their streak of outperformance and Perth, Adelaide and Brisbane remaining the strongest markets over the past year with prices 18.62%, 13.47% and 12.90% above March 2023 levels respectively. Year to date these capitals are also the strongest with prices up 3.32% in Perth, 2.24% in Adelaide and 2.22% in Brisbane.
The relative affordability of these cities homes, population growth, and very tight rental markets are supporting home values, while low stock levels are intensifying competition amid strong buyer demand resulting in a sellers’ market with home prices continuing to rise at a fast pace in 2024.
Supporting home prices, buyers in Perth are facing close to record-low choice. While affordability has declined significantly as interest rates have risen, WA remains the most affordable state across Australia, which is likely supporting prices as well.
In Sydney and Melbourne increasing confidence amongst sellers has seen the flow of new listings surge in January and February, improving choice for buyers.
Despite the increase in new listings hitting the market in Sydney, buyer demand has kept up as the summer selling season draws to a close and Sydney home prices lifted 0.40% in March to a fresh price peak.
Melbourne home prices lifted 0.27% in March bringing them up 1.71% year-on-year, the strongest annual growth since June 2022. Even so, prices in Melbourne remain 3.35% below their peak in March 2022. The price recovery in Melbourne is lagging Sydney and Brisbane but remains ahead of Hobart and Canberra, with prices up 2.30% from their January 2023 low.
Buyers in Melbourne have consistently enjoyed more choice relative to other markets with the total number of properties listed for sale sitting above the decade average since mid-winter.
At the other end of the spectrum prices in Hobart fell a small 0.03% in March and Hobart remains the weakest capital city market when comparing annual price growth (-1.65%), as well as the change from peak (-7.90%). However, this comes after several years of outperformance, as well as strong growth during the pandemic, which has seen affordability deteriorate. Home prices in Hobart are still up 36.1% since March 2020.
House prices have grown more quickly over the past year and are now 6.89% higher than a year ago, while unit prices are up 6.32% on their year ago levels.
This continues the trend seen throughout the pandemic - house values have experienced rapid growth up 44.2% on pre-pandemic levels, while the growth in unit values has been more moderate up just 21.7% on pre-pandemic levels.
The growth in home values over the past few years has been a tale of a two-speed market and whilst typically houses command a premium over units, and over the long run houses tend to outperform units with respect to price growth, since the onset of the pandemic, house price outperformance reached historic extremes.
The impact of the pandemic on housing preferences played a part here.
Since the pandemic onset growth in house prices has outpaced units in 83 of the 88 SA4 regions and because of the outperformance houses experienced through the pandemic the relative value units offer has increased.
In March prices for detached houses nationally grew 0.33% in the month whilst unit prices grew 0.39%. This growth brings house prices nationally up 1.48% year to date, with unit prices up 2.00% with the unit market starting 2024 on a slightly stronger footing.
Housing affordability has deteriorated significantly as interest rates have risen and the apartment market offers a relative discount.
Strong demand for inner city living post-pandemic, coupled with the rapid rate of population growth and housing supply constraints alongside the relative value units offer are likely buoying buyer demand and pricing in the apartment market.
WA regions account for six of the top 10 fastest growing regions in the past year, with Northern Adelaide and parts of southern and western Brisbane making the remainder.
Home prices in Perth are growing at the strongest annual pace on records back to 2010 and Perth has been the strongest performing city – and indeed the strongest performing market overall – in the past year.
Choice for buyers remains much more limited in Brisbane, Adelaide, and Perth, heightening competition, with limited housing supply relative to demand seeing prices continue to rise at a faster pace.
Home prices in 2023 remained resilient to the higher interest rate environment and this improvement in conditions that materialised through 2023 has continued in 2024.
It’s clear that despite higher interest rates, market conditions have improved, with interest rate stability now lifting confidence amongst buyers and sellers and the year has already kicked off busily.
Home buyers increasingly see it as a good time to buy a home and more sellers believe it's a good time to put their property on the market, which has led to a surge in listing activity and uplift in sales volumes across the country.
Demand has kept up with the strength in listing activity, with many anticipating that interest rates will fall in late 2024 likely providing a positive tailwind for activity.
Higher interest rates and inflation are squeezing household budgets and many remain concerned about the economic outlook but property prices are expected to lift further this year, with housing demand buoyed by population growth, tight rental markets, resilient labour market conditions and home equity gains, alongside the stable interest rate environment.
Australia’s population is experiencing rapid growth which is driving up the need for more housing. Meanwhile, the sharp rise in construction costs and labour and materials shortages have slowed the delivery of new builds, hampering the supply of new housing.
This imbalance between supply and demand has offset the higher interest rate environment and deterioration in affordability and is expected to continue to do so.
As a result, prices are expected to lift further in the months ahead, particularly while the expectation remains that interest rates will move lower in the second half of 2024.
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 – November 2023’. See report for Copyright and Legal Disclaimers.
