Brokers witness renewed demand amid rising house values

According to Domain’s data, the Australian housing market has rebounded, showing signs of strength after 10 consecutive months of decline.

Domain’s House Price Report for the second quarter revealed that combined capital house prices rose almost four times faster than the previous quarter, marking the steepest gain since late 2021.

The report highlighted that house prices have recouped $35,000 (3.4 per cent) of the $60,000 (5.6 per cent) lost during the 2022 downturn, showing significant progress in just six months.

The ongoing resurgence in the housing market is attributed to the continued mismatch between supply and demand, as new listings remain weak while demand rises, according to Domain’s chief of research and economics Nicola Powell.

Ms Powell noted the total number of homes for sale in the combined capitals is 22 per cent below the five-year average, leading to increased competition among buyers.

“As housing confidence improves, and as the mortgage cliff unravels, we could begin to see a slowdown in price growth as listings continue to rise, and those looking to buy have greater choice,” she said.

The housing market bounces back

From peak to trough between May 2022 and February 2023, the decline in house prices fell approximately 9 per cent, according to CoreLogic’s national Home Value Index.

The unexpected resilience of the housing market has surprised many economists who initially predicted a deeper fall of 15 per cent, with NAB moving to revise its house price forecasts.

Domain’s latest data showed how the capital cities are bouncing back with Adelaide and Perth emerging as the shining stars among the capital cities, where house prices reached record highs, lifting 5.3 and 5.5 per cent year on year.

Adelaide

Adelaide, in particular, witnessed a remarkable surge, with house prices soaring to another new record high, surpassing $800,000 for the first time.

South Australian mortgage broker Caroline Mundey at Directional Finance explained the shortage of stock in regional South Australia is pushing prices upwards.

“I have a number of clients in the Riverland who are struggling to find a property they can afford. Often, they are being outpriced by cash buyers,” Ms Mundey said.

However, first-time buyers have remained resilient in their pursuit of home ownership, harnessing government guarantees schemes, she said.

“I have also seen an increase in interest in first home buyers looking at home and land packages, since the changes to stamp duty for first home buyers in SA,” Ms Mundey said.

“I believe people are feeling a little more confident that the rate rises are coming to an end, and this has resulted in more inquires and lifted the Adelaide/SA market.”

Sydney

While Sydney’s market hasn’t experienced the same annual gains (up 0.1 per cent over) the June quarter saw the steepest quarterly gain since late 2021, up 5.3 per cent, as per Domain’s data.

As such, since reaching a trough in December 2022, house prices in Sydney have recouped $97,000 of the $151,000 lost during the 2022 downturn, recovering roughly two-thirds after two consecutive quarters of gains.

Sydney-based mortgage broker Louisa Sanghera at Zippy Finance said buyer demand is beginning to pick up on the back of low supply.

“Time will tell whether these stronger market conditions continue, but a pause in interest rate hikes is likely to be warmly received by buyers looking to purchase in the second half of this year,” she said.

However, Domain’s report cautioned that the current pace of quarterly growth, standing at 5.3 per cent and exceeding the historical average of 2.8 per cent, is unlikely to be sustained due to affordability constraints and rising supply.

But Ms Sanghera added many longer-term Sydney property owners remain in good financial shape because of the increased equity in their homes over the past five to 10 years in particular.

“Many borrowers looking to upgrade, or downgrade, are securing finance even in a higher interest rate environment,” Ms Sanghera said.

Melbourne

Melbourne also showed signs of a turnaround after five consecutive quarters of decline, while the current pace of quarterly growth of 0.4 per cent is moderate compared to the historical average of 2.8 per cent.

Melbourne’s housing prices experienced the first quarterly increase in a year and a half (up 0.4 per cent) for houses, signifying a turnaround after five consecutive quarters of decline.

Despite the rise, the current pace of quarterly growth is moderate compared to the historical average of 2.8 per cent and marked an annual decline of 4.4 per cent.

However, house prices have recouped $4,000 of the $71,000 value lost during the 2022–23 downturn.

Brisbane

Brisbane’s housing market continued its recovery in the June quarter, showing a second consecutive quarter of growth, although the pace of quarterly growth at 0.9 per cent remains moderate compared to historical average of 2.5 per cent.

Since reaching a trough in December 2022, house prices have recouped $14,000 of the $47,000 lost during the downturn – recovering just under one-third of the value lost and marked a 4 per cent decline year on year.

Hobart

Similarly, Hobart’s housing market saw a turnaround, with house prices rising for the first time since early 2022, but the pace of growth was also moderate at 1.2 per cent, indicating a slow and steady bounce back in prices.

Despite the rise, the current pace of quarterly growth is moderate compared to the historical average of 3.8 per cent and marked an annual decline of 6.9 per cent.

Since reaching a trough in March 2023, house prices have only recouped $9,000 (or 1.2 per cent) of the $64,000 (or -8.3 per cent) lost during the 2022–23 downturn, marking “one of the steepest downturns the Hobart property market has ever seen”, according to Domain.

Canberra

Canberra’s housing market stabilised during the June quarter, with house prices flatlining, suggesting that the city may have passed a price trough.

However, despite the stability, house prices experienced the steepest annual decline the city has ever seen, down 11.9 per cent from the June 2022 peak.

Perth

In contrast, Perth’s housing market reached a record high during the June quarter, displaying accelerated quarterly growth, supported by better affordability, tight rental markets, and favourable demographic trends.

The bounce back in the housing market comes off the back of 10 consecutive months of decline, the decline in house prices was milder, with a fall of approximately 9 per cent from peak to trough between May 2022 and February 2023, according to CoreLogic’s national Home Value Index.

[Related: FOMO phenomena pushes property price growth]