Home prices fell over 2022 following persistent interest rate rises and falling buyer demand. But in recent months there have been signs of recovery, with certain regions leading the rebound in prices.
According to Proptrack's April Home Price Index, home prices have increased for the fourth consecutive month.
Sydney, Adelaide and Perth led the growth in capital cities, with prices increasing by 0.40%, 0.41% and 0.21%, respectively, between March and April.
The top regional performers were WA and SA, where home prices grew 0.34% and 0.16%, respectively, over the same period.
While the cash rate is at its highest since April 2012 and borrowing capacities have reduced significantly since April 2022, demand from buyers remains high.
In fact, the number of potential buyers per listing is still 1.8 times higher than pre-pandemic.
But why is this the case?
The return of migration, coupled with an undersupply of new homes and limited properties for sale, have driven up competition.
An undersupply of new homes in Australia is contributing to strong competition from buyers. Picture: Getty
With few options and multiple people vying for available properties, home prices are rising again.
Higher demand is more evident in suburbs that are relatively affordable, with many buyers seeking out cheaper suburbs as their borrowing capacities decrease.
To gain a better understanding of the regions that are seeing the strongest recovery in demand, we looked at the SA4's where home prices have rebounded the most from their lows.
|GCCSA||% change since recent low||Month of recent low||Median AVM|
|Darling Downs - Maranoa||Rest of Qld||7.69%||June 2022||$364,000|
|Toowoomba||Rest of Qld||5.44%||July 2022||$526,000|
|Northern Territory - Outback||Rest of NT||5.41%||March 2022||$458,000|
|Perth - South West||Perth||4.54%||June 2022||$587,000|
|Sydney - City and Inner South||Sydney||4.50%||September 2022||$1,008,000|
|Perth - North East||Perth||4.10%||July 2022||$538,000|
|Mackay - Isaac - Whitsunday||Rest of Qld||3.72%||June 2022||$428,000|
|Adelaide - South||Adelaide||3.68%||September 2022||$681,000|
|Adelaide - North||Adelaide||3.64%||September 2022||$560,000|
|Perth - North West||Perth||3.45%||June 2022||$612,000|
Darling Downs - Maranoa and Toowoomba in Regional Queensland topped the list, with their home prices growing by 7.7% and 5.4% since their respective lows in June and July 2022.
More buyers were active in South West and North East Perth as well, pushing prices up 4.5% and 4.1%, respectively, since June and July 2022.
South West Perth is among the regions leading the recovery in home prices. Picture: Getty
Home prices in North and South Adelaide also rebounded, up 3.6-3.7% from their most recent lows in September 2022, signifying strong demand for properties in Adelaide.
Home values in the majority of regions leading the recovery are in capital city areas and below the national median of $737,000. This shows that demand is shifting back to cities and towards more affordable areas.
Over the next few months, we expect home prices to recover across most of the country and particularly in capital cities.
Once interest rates stabilise, this is likely to reduce uncertainty for buyers, while tight supply, international migration and a shortage of new homes will drive up competition and prices.