Property prices continue to go from strength to strength with new data showing that values are once again reaching record highs. According to CoreLogic, prices in the combined capital cities rose 0.8 per cent last month with Brisbane officially taking over from Canberra as Australia’s second-most expensive city.
Smaller capital cities like Perth (2 per cent), Adelaide (1.8 per cent) and Brisbane (1.4 per cent) have been seeing the most growth with values continuing to surge. The remaining capital cities recorded smaller gains, ranging from a 0.6 per cent jump in Sydney to a decline of 0.5 per cent in Hobart and 0.3 per cent in Darwin. Regional markets also saw values increase 0.6 per cent in May.
CoreLogic Research Director, Tim Lawless, said extremely low levels of supply in some of the smaller capitals were driving the gains.
“To say the housing market has been resilient is an understatement,” Mr Lawless said. “Housing values are continuing to rise across most areas and housing types, with growth accelerating in some markets.”
He said listings in Perth and Adelaide were 40 per cent below the five-year average, while Brisbane was 34 per cent under. “Inventory levels in these markets remain well below average despite vendor activity lifting relative to this time last year,” he said. “Fresh listings are being absorbed rapidly by market demand, keeping stock levels low and upwards pressure on prices.”
Mr Lawless said the most expensive homes have generally shown the lowest rate of growth over the past year. “This trend is apparent across every capital city except Darwin, demonstrating stronger conditions across the more affordable price points of the market,” Mr Lawless said.
“After recording a higher rate of gain through the early months of the growth cycle, conditions have faded across the upper quartile as borrowing capacity reduced and affordability constraints deflected demand towards middle-and-lower-priced properties.”
Mr Lawless said the large discrepancy between supply and demand is pushing up prices in the face of higher borrowing costs. “Eventually housing demand and supply will converge, driven by slowing population growth and, eventually, a ramp up in residential construction activity,” he said.
“In the meantime, we can probably expect further upwards pressure on housing values alongside a further erosion in housing affordability, even as interest rates stay ‘higher for longer’.”
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