The national median house price rose 0.4 per cent to a record $820,331 in March, in a rebound fuelled by optimism among home buyers following last month’s rate cut, data from Cotality shows.
The recovery in Sydney and Melbourne gathered momentum, but Perth has drifted below its recent peak as investor demand waned.
Melbourne’s median rose by 0.5 per cent to $781,318 over the month, behind Adelaide’s 0.8 per cent gain to $827,675.
In Sydney, Brisbane and Perth median prices rose by 0.3 per cent, 0.4 per cent and 0.2 per cent, respectively. Sydney has the highest median price in the country at $1.19 million.
Tim Lawless, research director of Cotality, formerly CoreLogic, said the recovery was becoming widespread and entrenched, particularly in the biggest housing markets.
“Housing values in Sydney and Melbourne have now increased for two consecutive months, so it’s looking more convincing that the markets had a subtle turnaround in line with the rate cut in February,” he said.
“We’re seeing upwards pressure on prices pretty much everywhere except in Hobart. I think it’s a lot more to do with the improvement in consumer attitude and sentiment, rather than the immediate effect of borrowing capacity being improved and serviceability.”
Hobart prices fell by 0.4 per cent over the month, while in Darwin they rose by 1 per cent and in Canberra by 0.2 per cent.
AMP chief economist Shane Oliver said despite a rebound in dwelling values, the recovery would remain subdued.
“I still think it’s going to be a relatively constrained upswing,” he said. “We’ve had a couple of months of modest gains, but if you look at the auction clearance rates, they seem to have slowed from their recent highs, which suggested buyers are still a bit cautious.
“I think the basic issue here remains that interest rates are still high, and the Reserve Bank will only gradually cut interest rates in this cycle, so affordability will only improve slightly.”
Oliver said slowing population growth, improving housing supply and high housing values will keep a lid on the recovery, with AMP predicting just 3 per cent growth this year.
Melbourne posted its first quarterly growth in a year, with values rising by 0.3 per cent over the past three months to March. Sydney rose by 0.4 per cent, the first quarterly gain since October last year.
Both capitals have outperformed Perth, which only posted a 0.2 per cent growth in the past three months. This is a sharp slowdown from the 6.4 per cent quarterly growth notched up in the June quarter last year when Perth prices were booming.
Peter Gavalas, Perth-based buyer’s agent with Resolve Property Solutions, said the more affordable suburbs that were targeted by investors over the past two years bore the brunt of the slowdown.
“The suburbs with sub-$800,000 median values are slowing fast because there are fewer investors buying in those markets,” he said.
“Most investors started moving away from those markets around October last year, so properties there are taking longer to sell.”
Perth prices are now sitting 0.05 per cent below their peak as of March, after they were revised lower as more data became available. Since March 2020, prices surged by 75.4 per cent, outpacing all the other capitals.
“Perth is starting to struggle because of poor affordability,” said Oliver. “In contrast, I think Melbourne is best placed to attract more investors because it offers better value compared to the other major capitals, even though it’s starting to pick up.”
Kevin Chokshi, Melbourne-based auctioneer with Ray White Bayside, said the February rate cut revived confidence and reignited some demand in the Victorian capital.
“The rate cut was small, but it boosted people’s confidence,” he said.
“Generally speaking, almost every property has a bidder at the moment, even the ones that haven’t had any interest during the campaigns.
“In the last 10 days, I’ve sold two properties where the buyer has only seen the property for the first time at auction, which hasn’t happened for a long time.
“To me, this is a massive sign of buying confidence because now people are willing to take that chance because they are convinced that the markets is on its way up in Melbourne.”
Back in Sydney, Thomas McGlynn, chief executive of real estate agency BresicWhitney, said while auction clearance rates pulled back slightly in recent weeks, demand for premium properties was still rising.
“The upper end of the market is performing quite strongly,” he said.
“Buyers are still very cautious and unwilling to go over budget, but they are willing to transact for quality properties.”
Over the past three months, Sydney’s upper quartile rose by 0.6 per cent, compared to a 0.3 per cent rise across the lower 25 per cent of the housing market by value.
Despite the recent slowdown, Perth still led the biggest gainers in the past 12 months, with values rising by 11.9 per cent, followed by Adelaide with 11 per cent increase.
Brisbane lifted by 8.6 per cent, Darwin by 2.6 per cent and Sydney by 0.9 per cent. Hobart and Canberra fell by 0.2 per cent and 0.5 per cent, respectively,
Nationally, dwelling values increased by 3.4 per cent.
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