We're currently in a two-speed property market.
House price growth in Sydney and Melbourne has continued to decline over the March quarter while at the same time other capitals are recording boom time housing market conditions according to the latest data from Dr. Andrew Wilson's My Housing Market.
Dr. Wilson reports that median house prices in Sydney and Melbourne increased by 1.0% and 0.2% respectively over the March quarter.
These results are the lowest levels of property price growth for Melbourne and Sydney since the June 2020 quarter when Covid lockdowns severely impacted our housing markets.
Despite this, annual house price growth in Melbourne and Sydney remains elevated as a result of the remarkable growth that occurred through 2021.
- Sydney houses prices are higher by 19.7% over the year ending the March quarter,
- Melbourne annual house price growth was 12.4%.
On the other hand, Brisbane continues to record extraordinary house price growth rising by 5.4% over the March quarter and up 33.8% over the year – clearly the best result of all the capitals.
Dr Andrew Wilson explained:
“Although Brisbane continues to record strong house price growth, the level of price growth is slowing and is now lower than the exceptional results recorded during 2021.”
Adelaide also reported strong house price growth over the March quarter - up by 3.4% with annual growth of 26.2%. But this market is also slowing with the March results are however also well below the quarterly prices growth recorded over 2021.
The Perth housing market has reported more solid results over the March quarter with the median house price increasing by 2.1% for an annual rise 13.8%
The smaller capitals recorded generally positive results over the March quarter with Hobart house prices rising by 3.9% and Darwin up by 7.1%.
Hobart house prices have increased sharply by 29.9% over the year ending the March quarter with Canberra higher by 25.3% and Darwin up 12.8%.
Although Canberra prices increased by 1.9%, it was nonetheless the lowest local growth reported since the September quarter 2020.
The number of properties listed for sale tells a story.
Dr. Wilson said:
“The change in the number of properties for sale over the past year is a good reflection of the current nature of our housing markets.
While the number of properties listed for sale are higher by 24.0% and 25.4% in Sydney and Canberra respectively offering more choices for buyers, by contrast the number of homes for sale in Brisbane and Adelaide are lower by 26.4% and 26.7% respectively than a year ago, offering fewer choices for buyers and placing upward pressure on prices.”
At the same time steeply declining affordability as result of booming house prices through 2021 has acted to restrict buyer capacity resulting in an easing of prices growth in Sydney, Melbourne and Canberra.
However, the significantly lower median house prices in Brisbane and Adelaide markets compared to Sydney, Melbourne and Canberra continue to provide the capacity for price increases buoyed by robust demand well ahead of supply.
This is particularly evident in Brisbane which is enjoying strong interstate migration into Brisbane.
Dr. Wilson forecast:
“Moving forward house price growth will continue to consolidate over 2022 as rising affordability barriers constrain buyer activity generally – although results are likely to remain positive.
The imminent return of mass international migration will bolster demand, particularly in the Melbourne and Sydney markets which are experiencing a n underlying shortage of housing relative to demand.”
While the prospect for higher interest rates could dampen housing demand in the foreseeable future, the Reserve Bank keeps reminding us that it is prepared to be patient and wait for strong and continuing wages growth before raising official rates.
Our rental markets
Australia is facing a rental crisis as national vacancy rates dip to the lowest point on record according to Dr. Wilson.
Rental vacancy rates keep falling across all cities for both houses and apartments.
Moving forward opening the international borders will put additional strain on the already tight rental market pushing rents even higher.
Dr. Wilson explained:
“An influx of migrants will likely affect Sydney and Melbourne in particular, as these are the most popular tourist destinations.”
House rents have risen strongly in all capital cities, led by Canberra (+19.7% over the last year) and Sydney (+15.4%.)
Dr. Wilson commented:
“While unit rents have not risen as strongly as houses, apartments in the previously oversupplied Melbourne and Sydney CBD markets are now starting to fill up and this will lead to further rental increases particularly as our international borders open up bringing back tourists and international students.”
..........................................................
Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog and hosts the popular Michael Yardney Podcast.
To read more articles by Michael Yardney, click here
