National home prices increased a small 0.04% in September, the PropTrack Home Price Index shows, with price growth slowing as more homes are listed for sale, providing greater choice for buyers.

The upswing in Australia’s home prices has persisted into the spring selling season, with national prices cycling through their 21^st consecutive month of price growth, though the pace of growth has slowed with buyers enjoying more choice.

Housing demand remains resilient, defying affordability constraints with prices lifting across much of the country in September, albeit at a slower pace in most markets. The number of homes listed for sale has lifted, providing more choice and slowing price growth. However, the pace of growth remains varied with differing supply and demand conditions driving diverse performance across the country.

Key findings from the September 2024 report:

•National home prices lifted 0.04% in September and are now 5.67% higher than a year ago.

•Prices in the combined capital cities have increased 5.88% over the past year, but were flat in September. Growth remained varied across the capitals, reflecting a multi-speed market.

•Adelaide (+0.53%), Perth (+0.24%), and Brisbane (+0.20%) recorded the strongest growth in September, while Hobart and Melbourne were the only capitals to see prices fall over the month, with prices down 0.31% and 0.30% respectively.

•Of the capital cities, Perth, Adelaide and Brisbane have recorded the fastest pace of growth over the past two years. This trend persisted in September with Perth prices up 22.34% over the past 12 months, followed by Adelaide (+15.05%) and Brisbane (+13.31%).

•Capital city prices have outpaced regional areas over the past year, but in September growth in regional areas (+0.11%) outpaced the combined capitals (+0.01%).

•Performance was also diverse in regional areas. Regional WA (+15.47%) and regional QLD (+10.98%) have led growth over the past year, while regional Victoria has recorded the largest falls year-on-year (-1.32%).

Performance remains varied as supply and demand conditions differ across the capitals

The pace of home-price growth remained varied across the capitals in September, reflecting multi-speed market conditions, with differing supply and demand conditions driving continued diverse performance across the country.

Prices in the combined capital cities have increased by 5.88% in the past year, but were flat in September.

Adelaide (+0.53%), Perth (+0.24%), and Brisbane (+0.20%) recorded the strongest growth in September, while Hobart and Melbourne were the only capitals to see prices fall over the month, with prices down 0.31% and 0.30% respectively.

Perth, Adelaide and Brisbane have recorded the fastest pace of growth over the past two years. This trend persisted in September with Perth prices up 22.34% over the past 12 months, followed by Adelaide (+15.05%) and Brisbane (+13.31%).

Though growth has slowed in these markets, low stock levels are intensifying competition, with less stock on the market relative to historic average levels. This, amid strong buyer demand, has fuelled strong price-growth in each of these markets.

In particular, sellers in Perth and Adelaide hold the upper hand this spring. Although the number of properties hitting the market has increased, total stock on market remains well below prior five-year averages as new listings are quickly absorbed amidst strong buyer demand in both cities.

The comparative affordability of the cities homes, and tight rental markets, have contributed to persistent strong growth in both Perth and Adelaide in recent years.

That comparative advantage has been eroded, however, after persistent strong growth and home prices up 79% over the past five years, median values in Adelaide may soon eclipse those in Melbourne. In fact, median unit values in Adelaide have already moved ahead, currently sitting at $607,000 compared with $606,000 in Melbourne.

Values in Melbourne were already surpassed by those in Brisbane earlier this year, and price momentum has been consistently weaker in Melbourne, as buyers have consistently enjoyed more choice relative to other markets. Higher property taxes in Victoria are also playing a role.

Increases in taxes on investment properties have made owning a rental property less attractive in Victoria, leading to uplift in the share of investors selling. The state is also not attracting the same uplift in investor activity as other states as a result.

At the same time, in the past decade, construction rates relative to population growth in Victoria have been more balanced compared to other parts of the country.

Melbourne home prices fell 0.30% in September, the sixth straight month of declines, with prices falling 2.19% in that period. Prices were 1.79% below their September 2023 levels and 4.82% below their March 2022 peak.

Capital cities retain their lead over the year

Capital city prices have outpaced regional areas over the past year but in September growth in regional areas (+0.11%) outpaced the combined capitals (+0.01%).

Prices in regional areas rose 0.11% over the month to be 5.12% above September 2023 levels.

Performance has also varied in regional areas. Regional WA (+15.47%) and regional QLD (+10.98%) have led growth over the past year, while regional Victoria has recorded the largest falls year-on-year (-1.32%).

Differing supply and demand conditions are contributing, with buyers in regional Victoria enjoying a lot more choice with total stock on market about 40% above the prior five-year average, giving buyers the upper hand.

House prices lift in September while units record small falls

Nationally, house prices lifted by a small 0.05% in September again outpacing units, with unit prices nationally recording a slight 0.02% decline.

National house prices have lifted 5.75% over the past year, slightly outpacing growth in unit values (5.26%). However, since the pandemic onset, house values are up 49% compared with just 25% for units.

After a significant revaluation of space, favouring house values since the onset of the pandemic, affordability pressures, as well as the rejuvenation of city living, has left home-price growth across property types broadly comparable over the past two years.

Markets in regional Queensland, SA and WA continue to record strong growth

Interest rates remain at high levels and house prices have risen significantly in recent years, while growth in household incomes has not kept up with these increases. As a result affordability has deteriorated to its worst on record.

Generally across the capital cities, more affordable regions have outperformed over the past year, with strength in home-buying demand buoyed as buyers push down the value chain. The more affordable regions within each city, including Adelaide’s north, Ipswich, and Perth’s northwest and south, have seen rapid price increases.

Perth has been the strongest performing city – and indeed the strongest performing market overall in the past year – and regional WA the strongest regional market.

One reason Perth is one of the hottest markets in the country is its relative affordability. Despite recent gains, Perth housing values remain affordable compared to other capital cities after a decade of underperformance relative to east coast capitals, with prices now quickly rising.

Low stock levels are also intensifying competition and sellers are holding the upper hand this spring, fuelling continued strong growth, despite the pace of growth slowing with the uplift in new properties hitting the market.

Outlook

Home prices in 2023 remained resilient to the higher interest rate environment and this improvement in conditions that materialised in 2023 has continued in 2024, with national prices cycling through their 21st month of growth.

Housing demand remains resilient, defying affordability constraints with prices lifting across much of the country in September, albeit at a slower pace in most markets.

The number of homes listed for sale has lifted providing more choice and slowing price growth. However, the pace of growth remains varied with differing supply and demand conditions driving diverse performance across the country.

Supporting price growth at present and in the period ahead, July’s tax cuts boosted borrowing capacities and buyers’ budgets, while the persistent growth in home prices is likely motivating many to overcome affordability challenges. Strong population growth, tight rental markets and home equity gains are also bolstering demand.

Meanwhile, building activity remains challenged, exacerbating a chronic shortage of housing.

As a result, prices are lifting across much of the country.

Though prices are rising, sustained high interest rates, cost of living pressures, subdued consumer sentiment and affordability constraints are weighing.

Buyers also now have more properties to choose from, and alongside uncertainty around the timing of interest rate cuts, the pace of price growth has slowed.

Ahead, prices are expected to lift through the typically busier spring selling season, albeit at a slower pace.

* The PropTrack Home Price Index measures the monthly change in residential property prices across Australia to provide a current view on property market performance and trends. PropTrack Home Price Index uses a hybrid methodology combining repeat sales with hedonic regression. The repeat sales method matches resales of the same property while the hedonic regression estimates values based on the value of similar properties. The hybrid model allows two properties in the same Australian Bureau of Statistics Statistical Area 1 (SA1) region, of the same type, to be matched and controls for differences in property characteristics, as in a hedonic regression. The PropTrack Home Price Index is a revisionary index with the whole back history updated monthly with current transaction information.

** This report uses realestate.com.au internal data and data sourced from third parties, including State government agencies. It is current as at the time of publication. This report provides general information only and is not intended to constitute any advice and should not be relied upon as doing so. If you wish to cite or refer to this report (or any findings or data contained in it) in any publication, please refer to the report as the ’PropTrack Home Price Index Report – July 2024’. See report for Copyright and Legal Disclaimers.