Australian Housing Market Hits Record Highs Amid Strong Demand and Limited Supply - Property Inc

Australian Housing Market Hits Record Highs Amid Strong Demand and Limited Supply

Australia’s housing market has surged to new heights, with record-breaking prices despite increased numbers of properties for sale. This rejuvenation comes after a challenging 2022, which witnessed sharp declines due to multiple interest rate hikes.

According to the PropTrack Home Price Index, as of September, national prices have fully recovered from 2022’s falls. Remarkably, prices rose 4.31% this year. Capital cities, particularly Perth, Adelaide, and Brisbane, are now at record highs, with Sydney just 0.03% below its pandemic peak.

“Despite the uplift in the number of properties coming to market, national home prices have moved higher again, regaining 2022’s rapid price falls in entirety to reach a record high in September,” said Eleanor Creagh, PropTrack senior economist.

Anne Flaherty, another economist from PropTrack, pointed out that this growth is driven by factors such as “record levels of net overseas migration, tight rental markets, and a housing shortage”. She explained that the significant aspect of the current market is the disparity between supply and demand. “Even though the supply of properties for sale picked up over September, so too has buyer demand which means there remains high levels of competition out there”.

However, the boom has also led to increased challenges for first-time home buyers. Flaherty stated, “For first home buyers, conditions have never been tougher,” noting that rising prices paired with high interest rates have made housing affordability the “worst level” in over three decades.

Looking forward, experts predict that interest rates have likely peaked and with strong population growth rebounding, prices are expected to continue to rise. “As we head further into spring, more markets are likely to reverse 2022’s fast falls to set new peaks,” Flaherty commented1. Creagh echoed this sentiment, stating, “Looking ahead, interest rates have likely peaked and population growth is rebounding strongly”.

Despite the general upward trend, some areas are lagging behind. Hobart remains 6.6% below its peak levels, and Darwin was the only capital where values decreased in September.

The Australian housing market, shaped by a combination of external factors, supply-demand imbalances, and regional variations, is a dynamic entity. With both challenges and opportunities on the horizon, it remains to be seen how these trends will evolve in the coming months.

References:

Mascarenhas, Carla. “House prices at ‘record high’ as property market rebounds.” ↩ https://www.news.com.au/finance/real-estate/house-prices-at-record-high-as-property-market-rebounds/news-story/6653986453fdb3ad7ed69a41c5e4db8d 

Butkovich, Daniel. “Home prices hit record high despite selling surge.” ↩ https://www.realestate.com.au/news/home-prices-hit-record-high-despite-selling-surge/ 

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