Sydney house prices rose 5.3 per cent in the June quarter, nearly double the long-term average growth according to Domain. Domain
Sydney’s house prices jumped 5.3 per cent in the June quarter, which is more than four times faster than the growth recorded in the previous three months, and the sharpest quarterly increase since late 2021, new Domain data shows.
The rapid growth has also exceeded the historical average of 2.8 per cent, fuelled by strong demand outpacing the available home listings.
House prices increased across all capital cities, lifting the combined capitals’ growth by 2.7 per cent, which is nearly four times faster than the March quarter.
Melbourne house prices rose 0.4 per cent, which is the first quarterly increase in 18 months. Brisbane rose 0.9 per cent and Hobart was up by 1.2 per cent. Meanwhile, Adelaide and Perth rose by 2.8 per cent and 2.2 per cent respectively.
But the market recovery could slow in the coming months if the recent unseasonal increase in new stock continued, said Nicola Powell, Domain’s chief of research and economics.
“That growth momentum is initially driven by the lack of listings, which has really supported greater competition between buyers and is the reason why we’ve seen such robust rates of growth, particularly coming out of Sydney,” Dr Powell said.
“But I think what we’ve started to see is the listings environment appears to be changing. The flow of new listings is improving, well before the spring selling season, likely spurred by the persistent pricing recovery or home owners selling due to the higher debt costs.
“As this trend continues, we’re likely to see a slowdown in the rate of growth to a more modest pace as the demand and supply equation rebalances.”
The level of new stock coming into the market has now risen higher than the five-year average across Sydney, Melbourne, Canberra and Darwin, according to Domain.
In Sydney, fresh stock is sitting 3 per cent above the long-term average, 5 per cent higher in Melbourne, 3 per cent in Canberra and 19 per cent in Darwin.
Thomas McGlynn, Sydney-based real estate agent and chief executive of BresicWhitney, said so far there has been no signs of a slowdown in new listings in Sydney.
“I think the flow of listings that we’ve seen for the first two months of winter, which are traditionally slow months for listings, will continue for the rest of the year,” Mr McGlynn said.
“As a business, we’ve seen three times more listings signed in June and July than what we saw for the same period last year, so that is significant. That doesn’t seem to be slowing down.”
Dr Powell also expects to see higher listings in spring as more people feel the strain of higher interest rates.
“I do think that we’re likely to see new listings continue to rise, and they are likely to rise faster than demand,” Dr Powell said. “Not only do you have that pent-up supply that has been building up since last spring that is now coming to market, you’ve also got some people probably wanting to sell before they get into financial difficulties.
“But I’m not expecting prices to fall below the trough. We’re still expecting prices to rise, but at a slower pace.”
Domain is predicting Sydney house prices to increase as much as 9 per cent by June next year, Melbourne to rise by up to 2 per cent and Brisbane by 4 per cent. Across the combined capitals, house prices are forecast to increase between 2 per cent and 4 per cent.
Louis Christopher, SQM Research managing director, said the lower than expected inflation data could see interest rates staying on hold this month, which could spur some buyers to return to the market and soak up the increased listings.
“I think we could see a few more buyers in the market if the Reserve Bank of Australia doesn’t lift interest rates next week, which will be the second month rates will be on hold,” Mr Christopher said.
“I think we’re getting closer to the point where we’ve reached that peak in interest rates, so we could possibly expect to see more buyers in the market. Let’s keep in mind that we’re still getting very strong migration numbers coming through, which support demand.”
Shane Oliver, AMP chief economist, said the improving inflation numbers have reduced the likelihood of much higher interest rates, but risks remained for the housing market.
“The lower inflation numbers is a positive sign that the RBA is now close to the top of the cycle,” Dr Oliver said.
“So the risk of a reversal of the earlier price gains is diminished, but there’s still a risk they could pull back. You could still see a slowdown in demand and in the pace of price increases, but they could be milder, depending on how weak the economy gets.”
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