Home prices have experienced a slow start to the New Year, according to a new report, but steady interest rates may change that.
Home prices have remained steady into the New Year but an expert warns house prices will rise in 2024 despite strained affordability sitting at a three decade high.
PropTrack’s latest Home Price Index report shows capital city home prices were “relatively flat” throughout January and only lifted by 0.02 per cent following a small drop in prices in December.
The report also revealed prices in regional areas grew slightly throughout the first month of the year with the price of homes in regional South Australia rising by 0.24 per cent and 0.25 per cent in Western Australia, who experienced the largest increase.
PropTrack Senior Economist and report author Angus Moore said several factors are behind the flat performance of house prices across the country. “Home price growth has slowed from what we were seeing in the middle of 2023, with national prices relatively unchanged since November,” Mr Moore said. “Several factors have contributed to the slowdown, including the additional interest rate rise in November and more homes hitting the market in late winter and spring, giving buyers more choice.”
Mr Moore said while regional areas have “slightly outpaced” capital cities in the past few months, capital cities still remain the “stronger performer” within the past year and suggested prices will continue to grow in the next year. “Strained affordability – which sits at its worst level in at least 30 years – is likely weighing on home prices,” he said. “Nonetheless, we expect prices in 2024 will still grow, albeit at a slower pace than in 2023.
“A more stable interest rate environment, coupled with ongoing population growth and a low level of new building activity, will support home price growth this year.” The median value of all dwellings in capital cities in Australia is more than $800,000 while nationally the median value of homes and units is $760,000, according to the PropTrack data.
SYDNEY
Home prices in Sydney declined slightly by 0.04 per cent in January following a small decline in December. Mr Moore said “the pace of home price growth has slowed compared to the middle of 2023,” amid lighter sales volumes as a result of the end of year break. The price of dwellings within the capital city are still up 6.78 per cent compared to January last year. The report also revealed the value of homes and units in Sydney are valued the highest within Australia, with the median value of all dwellings surpassing $1m.
MELBOURNE
House prices across Melbourne dropped by 0.09 per cent within the first month of the year, continuing the area’s “recent run of small monthly declines”.
The city’s number of properties listed for sale is currently sitting above the decade average since midwinter and Melbourne buyers have been “enjoying more choice”, according to the report.
The median value of a dwelling in Melbourne falls just short of $800,000.
BRISBANE
The price of dwellings in Brisbane rose by 0.17 per cent in January, which meant the capital city reached a new peak of 10.17 per cent higher than last year.
Mr Moore said Brisbane “has been one of the strongest performing markets since the pandemic began”.
Home prices are currently up 58 per cent since March 2020 and the median value of a Brisbane property is nearly $795,000.
ADELAIDE
Home prices in Adelaide fell by 0.13 per cent in January, which contrasted a “strong performance” in 2023. This was likely due to lighter sale volumes during the end of year break.
Mr Moore said he expects Adelaide “will continue its momentum from 2023 and be one of the stronger-performing cities, given its relative affordability”.
The median value of dwellings across Adelaide is slightly more than $700,000.
PERTH
Perth currently has the strongest performing property market across Australia, a trend it has continued from 2023, according to the report.
Perth experienced “notable growth” in the New Year, with prices rising by 0.05 per cent, reaching 15.45 per cent higher than last year.
However, Mr Moore said Perth buyers are facing record-low choice which has supported home prices.
WA remains the most affordable state across the nation with the median value of houses and units across the state sitting at $640,000.
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