Property prices have recovered half their declines

Property prices have continued to gain momentum in the June quarter, with values now halfway into their recovery according to a new report.

Domain’s House Price Report for the June quarter, found that capital city house prices have risen almost four times faster than the previous quarter, to produce the steepest gain since late 2021. 

Since reaching a trough in December 2022, where values were down 5.6 per cent, house prices across the combined capitals have now recovered 3.4 per cent or roughly 50 per cent of their declines.

While units have recouped 2.6 per cent of their 5.4 per cent falls during the 2022-23 downturn.

Sydney continues to lead the recovery and has seen the greatest acceleration in growth and is now two-thirds of the way into the recovery. 

All capital cities saw house prices rise over the June quarter and have moved into a recovery phase, apart from Canberra, which is holding steady in a price trough.

Domain’s Chief of Research and Economics, Dr Nicola Powell said a lack of new listings has been one of the big drivers of the recovery.

“The continued mismatch between supply and demand has been a fundamental contributor to the price recovery currently being experienced in the Australian housing market,” Dr Powell said.

“This has been fuelled by an unseasonably weak flow of new listings and rising demand – with the total number of homes for sale 22 per cent below the five-year average for the combined capitals.”

“However, the tide is gradually changing, as the flow of new listings improves, likely spurred by the persistent pricing recovery or home owners selling due to the higher debt costs. 

She said while new listings remain lower than average, there is noted improvement from the deeper declines we have seen previously. 

“Some cities are seeing an improvement – in Sydney, Melbourne, Canberra and Darwin, new listings are higher than their five-year average,” she said.

According to Dr Powell, Sydney’s house prices rose four times faster than the previous quarter, while unit prices also gained traction over the June quarter, rising at double the pace of the previous quarter to produce the strongest result in two years.

Prices have now recovered 6.7 per cent of their 9.5 per cent decline.

Melbourne’s housing market is rising again, with house and unit prices increasing over the June quarter, marking the first quarterly increase in a year-and-a-half for houses.

Values have rebounded just 0.4 per cent after falling 6.5 per cent.

Brisbane house prices continued to recover, rising for a second consecutive quarter to produce the steepest quarterly gain in a year. 

Values have bounced back 1.7 per cent after dropping 5.5 per cent.

Brisbane was also one of only two capital cities to see unit prices reach a record high over the June quarter. 

Adelaide remains one of the best-performed markets in the country, with house prices hitting another record high and not experiencing a decline.

While unit prices experienced the steepest quarterly surge the city has seen since 2007, reversing the previous quarter’s decline.

Stability has returned to Canberra’s housing market as house prices flatlined over the June quarter after seeing a decline so far of 11.9 per cent.

Despite the stability, house prices experienced the steepest annual decline the city has ever experienced. 

Perth house prices increased over the June quarter to an all-time high, however, unit prices declined, pushing annual declines the steepest in three-and-a-half years.

Hobart’s housing market is rising again, with house prices increasing over the June quarter, marking the first quarterly increase since early 2022.

Values declined 8.3 per cent and have recovered 1.2 per cent.

While Darwin’s housing market is also on the rise, with house prices increasing over the June quarter to regain most of last quarter’s loss. 

Dr Powell said that it’s likely that the surge in prices is likely to slow down with a number of headwinds likely to play out over the second half of the year.

“As housing confidence improves, and as the mortgage cliff unravels, we could begin to see a slowdown in price growth as listings continue to rise, and those looking to buy have greater choice”, she said.

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.