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A new industry report has revealed that house and unit prices across the combined capitals surged to unprecedented values over the September quarter, with further growth still to come.
Domain’s House Price Report for the September 2024 quarter has revealed that combined house and unit prices across the combined capital cities increased to new record values off the top of the seventh consecutive quarterly increase for houses, and the sixth for units.
House prices across the combined capitals rose by 0.8 per cent from the previous quarter, and 7.8 per cent year-on-year to a record median price of $1,155,683, while unit prices increased 1 per cent over the quarter and 5.9 per cent from the previous year to a record median value of $662,521.
Notably, the report also showed that house price gains over the quarter grew at a rate roughly three times slower compared to the previous quarter, representing the weakest outcome since March 2023.
Domain noted these findings indicate that the slowdown in house price gains is becoming more pronounced across most cities, representing a departure from the “aggressive price increases” seen over the past two years.
Pressure persists in many major capitals
Despite these conditions, four of the eight capital cities – Sydney, Brisbane, Adelaide and Perth – recorded record-high house and unit prices over the quarter.
Although Sydney registered a new record median house price of more than $1.65 million in the September quarter, Domain reported that the city’s 0.6 per cent quarterly house price gains represented less than half of the growth of the previous quarter.
The city’s quarterly unit price growth of 0.9 per cent increased from last quarter, and resulted in a new record median unit price of more than $815,258 – a high not reached in Sydney since December 2021.
Perth’s house prices rose over the September quarter to reach a new record median price of $894,842. Similarly to Sydney’s growth, Perth’s 3.1 per cent house price growth over the period represented less than half of the growth exhibited in the city over the previous quarter.
Brisbane and Adelaide reported quarterly house price growth of 1.5 per cent and 4.2 per cent respectively, resulting in new record median house prices of $994,945 and $973,336.
Although growth in both cities slowed from last quarter, Domain noted that both the Queensland and South Australian capitals are still on track to join the $1 million club for median house prices by the end of the calendar year.
Melbourne’s 1.5 per cent reduction in house price growth over September was the most drastic across the capital cities in the September quarter, and resulted in a median house price of slightly over $1,024,000.
Canberra’s house prices decreased for the first time this year and resulted in a house price of $1,081,227 over the September quarter. The city’s units declined by 4.5 per cent to $565,288, marking the city’s steepest annual price decline since December 1994.
Market dynamics in flux
Over the year since September 2023, Domain reported that all cities saw a deceleration in annual house price gains aside from Adelaide and Hobart, with all cities also seeing a deceleration in annual unit price gains except for Perth and Hobart.
Domain’s chief of research and economics, Dr Nicola Powell, attributed this deceleration to widespread affordability constraints, highlighting that the buyer pool has become more increasingly limited as a result of “wages not keeping pace with rising property prices” and the ongoing cost-of-living crisis.
“Consequently, as purchasing power diminishes, buyers find it more challenging to remain competitive, leading to a further slowdown in activity. This combination of factors has left households feeling significant financial pressure, and we’re seeing this play out in subdued house price growth,” Powell said.
She also highlighted that the slowing in growth has been coupled with increased housing supply, with new supply in September reaching its highest level since March 2022 across the combined capitals.
Powell explained that buyer demand has not kept pace with increased supply, and speculated that this sentiment was a result of “buyers waiting for a cash rate cut to enhance their borrowing power”.
“As stock levels rise, clearance rates have softened to the lowest this year, properties are staying on the market longer, and price negotiations have become more common. Overall, the market appears to be shifting towards a buyers’ market, creating more favourable conditions for purchasing a home,” she said.
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