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Property prices hit records across the country but the market is cooling

Australia’s median house price is fast approaching $1 million with the fastest rate of annual growth on record at 21.9 per cent, according to the latest data.

Released today, the Domain House Price Report shows that house prices across the nation jumped 3.5 per cent in the September quarter to a new record of $994,579.

Unit prices also rose 1 per cent to a high of $609,642.

The data shows house prices have risen three times faster than units over the past year, but that the peak pace of growth may now have passed, with the rate of house price growth across the capital cities halving between the June and September quarters.

Domain Chief of Research and Economics Dr Nicola Powell said buyers may soon experience some price relief.

“We’re seeing the property market begin to cool down with soaring house prices in the last year adding to ongoing affordability pressures affecting buyers participation in the market,” Dr Powell said.

“As COVID-19 lockdowns and restrictions come to an end and the sustained high prices appeal to vendors, sellers are beginning to re-engage with the market, increasing supply, which in turn offers greater choices for buyers.”

Every capital city, except for Perth and Darwin, hit record high house prices, while unit prices in Sydney, Melbourne and Adelaide also reached new highs. Hobart maintained its record unit price.

Dr Powell said Domain home loan data also showed that customers had been borrowing more to keep up with rising prices and this had driven house price growth upwards.

But the Australian Prudential Regulation Authority tightening lending criteria may slow the upward trajectory of this trend.

“However, the sheer affordability of keeping up with rapid house price gains is proving a barrier for many buyers, especially first-home buyers facing spiralling deposit goals and poor interest accrued on savings,” Dr Powell said.

Source: Domain

Sydney

Sydney’s house prices have risen about $6700 per week over the past year, jumping a total of just over $349,000 to hit a record $1,499,126.

This equates to 30.4 per cent annual growth, which is the highest on record. 

However, the city’s quarterly growth has slowed from a peak of 9.6 per cent in the March quarter to 4.6 per cent in the September quarter.

Sydney unit prices gained $18,695 in the September quarter to hit a record of $802,475.

“With significant disparity and gap between house and unit prices, Sydneysiders are seeing greater value in units due to house price affordability constraints, as well as rising investor activity supporting increased buyer demand and rising unit prices in the last quarter,” Dr Powell said.

The number of NSW owner-occupier first-home buyers taking out home loans has dropped 21 per cent since March, but investment home loans are up 15 per cent as investors chase capital growth and improved rental conditions. 

Buyer demand has also been unseasonably strong in Sydney, with supply levels 19 per cent down on the five-year September average.

Melbourne

Despite being in lockdown for much of the September quarter, house prices in Melbourne hit a record high of $1.038 million on the back of 16.8 per cent growth over the past year.

Melbourne has recorded the second lowest house price growth of all the capital cities since the start of the pandemic, which could mean there’s room for prices to rise further post-lockdown.

House prices climbed 1.6 per cent in the September quarter to $1,037,923, while units rose just 0.3 per cent to a record of $576,879.

“Lengthy lockdowns continued to drive buyer preference for larger homes and more space,” Dr Powell said.

“This has resulted in house prices growing almost three times faster than units over the past year, a divergence that has created a record price gap in Melbourne.”

Seller confidence has already started to rebound out of lockdown with new listings climbing 66 per cent in September compared to August. This is 31 per cent higher than the five-year average for Melbourne.

Canberra

House prices in the nation’s capital have risen $720 a day over the past year, including a 5.7 per cent jump in the September quarter to soar to a record of $1.074 million.

Since the start of the pandemic, house prices have risen 38.4 per cent, which is the highest growth rate out of all the capital cities.

For the first time since 2005, Canberra is now the second most expensive capital city to buy a house in.

However, unit prices fell 2.9 per cent to $489,710 in the quarter.

“Canberra’s soaring housing prices reaching $1 million median house price highlights the booming property market and strong demand present, likely to represent those buyers who had previously been unable to secure a home earlier in the year,” Dr Powell said.

“In fact, total supply continued to shrink to a multi-year low in September. 

“While all regions reached a new high house price, price growth at the upper end of the market is starting to lose momentum, suggesting price acceleration will begin to ease and the price growth peak has passed.”

Brisbane

Brisbane’s median house price passed the $700,000 mark for the first time, climbing $29,279 in the September quarter to hit a record $702,455.

However, unit prices slipped slightly, down 0.5 per cent, to $396,609, which is $19,411 down on 2016’s record.

Dr Powell said buyer demand in the Greater Brisbane market remained strong as the number of homes sold hit its highest point in at least six years. 

More sellers are also starting to come to the market with new listings up seven per cent over the first three weeks of October compared to the two-year average.

“Queensland has been the main state to benefit from the flow of Australians that have sought to either escape lockdown or embrace the remote working culture,” Dr Powell said.

Adelaide

Adelaide experienced its strongest annual price growth since 2008, with house prices hitting a record of $667,888 and unit prices increasing five per cent over the September quarter to a record of $357,615.

The number of homes for sale in September remained tight, dropping 28 per cent below the five-year average.

Darwin

Darwin house prices experienced the strongest annual growth since 2004 at 33.2 per cent, to sit at the highest median price in six years at $640,068.

That’s just more than $38,000 lower than the high reached in 2013, but it would only take two quarters, at the same growth rate, of 5.1 per cent, to surpass that.

Hobart

Hobart house prices jumped almost $67,000 in the September quarter to hit a record of $698,212. 

Annually house prices are up 31.9 per cent which is the strongest growth in 17 years.

Unit prices have also climbed 23.8 per cent in the past year to hit a record $532,284.

“The current upswing is now the strongest the city has seen in 17 years,” Dr Powell said.

“All price points are rising by double digits with entry-level prices recording the strongest rates of growth.

“All Hobart regions have reached a new record house price in September.”

Perth

Perth is the most affordable city to buy a house in with property prices falling in the September quarter for the first time in two years.

House prices fell 0.6 per cent to $598,601, while units fell 3.3 per cent to $363,653. 

The quarterly decline in house prices signal that buyers are becoming constrained by affordability and the fear of overpaying created by intense buying conditions.

Source: Domain

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Kylie Dulhunty

Kylie Dulhunty is the Deputy Editor at Elite Agent.