Nerida Conisbee,
Ray White Chief Economist
Brisbane, Perth, Adelaide and Darwin are now back to peak as house price growth continues.
Earlier this year, I predicted that all capital cities will be back to their 2022 peaks this year, a call which was not in line with the dramatic downturn expected at the time. The timing of this recovery is moving even quicker than expected. Although house prices took a bit of a stumble in April, prices are back on the rise in May. Brisbane, Perth, Adelaide and Darwin are now above their 2022 peaks. All other cities are expected to follow over the next six months.
After declining in April, Sydney and Melbourne roared back in May. As mentioned last month, our two largest cities are the most sensitive to interest rate changes. There is still some uncertainty as to whether rates have peaked and until this happens, it is likely that these two cities will continue to be stop/start in terms of price growth. Both cities, along with Canberra, and Hobart are expected to take the longest to return to their 2022 peak, likely not until the final quarter of the year.
House prices don’t move linearly with interest rates but are also driven by other factors such as population growth and housing availability. It may be a lot more expensive to get finance, but it is also far more difficult to get a home, whether to rent or buy.
A further consideration is that the construction costs continue to be problematic, reducing the number of new homes being completed. It will take some time for this to be resolved. A combination of low building approvals, slow to complete new homes and very high levels of population growth mean that this pressure on price and rental growth will continue for at least the next 12 months.
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