Australian House Prices Reach for New Heights Amid Rising Demand and Supply Gaps

Australia’s housing market is seeing a surge in prices, putting it on track to hit a new record high, with the latest property data reflecting a continued mismatch between supply and demand.

According to a recent report by Isobel Roe, CoreLogic housing data showed a national price increase of 0.8% in September, with leading gains in Adelaide, Brisbane, and Perth1. These cities have a housing supply that remains about 40% below the five-year average. Despite the influx of properties for sale and the looming pressure of climbing interest rates, the median house price in Sydney has reached $1,110,660, while Melbourne and Adelaide report median prices of $776,716 and $691,591, respectively.

Eliza Owens, Head of Research at CoreLogic, highlighted the situation, stating, “It’s probably a reflection of the extraordinary mismatch of supply and demand in Australia’s housing market.” This sentiment mirrors the experience of many first home buyers, like Justine and Kester Rozario, who, despite their six-month-long search, have yet to find an affordable home.

The consistent rise in property values has caught the attention of the Reserve Bank of Australia (RBA). As Richard Woods reports, there’s mounting pressure on the new RBA governor, Michele Bullock, to address rising house prices, especially given the recent data from CoreLogic’s national Home Value Index (HVI). This index recorded a 0.8% rise in September, primarily driven by cities like Perth, Brisbane, and Adelaide.

Tim Lawless, CoreLogic’s head of research, noted that while some cities like Hobart and Canberra still have a way to go before staging a nominal recovery, cities such as Perth and Adelaide have already achieved new record highs in dwelling values. Interestingly, the rise in house prices nationally has largely been driven by lower and middle value properties. Lawless added, “This shift is partly attributable to the lower value capitals such as Perth and Adelaide recording a faster rate of growth.”

However, amidst this upward trend, some feel there’s a silver lining. Mr. Rozario observed that growth might be slowing down in the Sydney market, saying, “I think over the last three or four months it’s probably slowed down a little bit in terms of the amount of people that are at these auctions.” This perspective is backed by CoreLogic data, which indicates a slight deceleration in price growth in recent months.

But for real estate agents like George Elias, the market remains robust. Highlighting the continued demand-supply imbalance, Elias commented, “There’s a lot of buyers in the market and not a lot of properties up for sale.”

In conclusion, Australia’s housing market continues to be a hot topic, with rising prices and persistent supply-demand imbalances. As the RBA gears up to address these challenges, hopeful homeowners and stakeholders will be keenly watching the next moves.

References:

“Australian house prices on track to hit new record high, latest property data shows” by Isobel Roe. ↩ https://www.abc.net.au/news/2023-10-02/australia-house-prices-on-track-hit-record-high-corelogic-data-/102922090 

“Rising house prices puts pressure on new RBA governor ahead of meeting” by Richard Woods. ↩ https://www.9news.com.au/national/property-prices-in-australia-rise-putting-pressure-on-interest-rates/992d3a4e-8213-46d4-8426-ed278e863eb1