Australian house prices keep growing but Sydney posts first fall in 17 months
Australian property prices continued to race upwards last month, but the nation’s two biggest cities have started lagging well behind.
- Home values rose 0.6 per cent nationally in February according to CoreLogic
- Brisbane (+1.8pc), regional (+1.6pc) and Adelaide (+1.5pc) had the biggest increases
- Sydney prices fell (-0.1pc) for the first time in 17 months with Melbourne values flat
For the first time in 17 months, Sydney property prices recorded a monthly fall, of just 0.1 per cent in February.
“Not much of a decline, the equivalent of about $1,000 at the median value level, but I think it’s definitely a sign that the market is shifting slightly from a sellers’ to a buyers’ market,” said CoreLogic’s head of Australian research Eliza Owen.
Melbourne prices were flat for the month and up just 0.2 per cent over the past three.
CoreLogic’s head of Australian research Eliza Owen says Sydney and Melbourne are switching from sellers’ to buyers’ markets. (ABC News: Billy Cooper)
“Even before an official rise in the cash rate, there are headwinds for the housing market,” explained Ms Owen. “These come in the form of affordability constraints, higher levels of listings that are coming onto the market — particularly in Sydney, Melbourne — as well as a lift in the fixed mortgage rate space.”
Smaller capitals & regions see biggest rises
But market conditions remain very different among the smaller capitals and regional areas, with Brisbane (+1.8pc), Adelaide (+1.5pc) and regional Australia (+1.6pc) recording the biggest monthly price rises.
Kate Grace is preparing to pack up the home that has been in her family’s hands for three generations. Phil and Kate Grace are ‘very happy’ with the price they’re getting for their home, which received offers before it was officially listed by their agent in Adelaide. (ABC News: Carl Saville)
“It was built by my grandparents and then I bought it from my grandmother’s estate when she passed away,” Ms Grace told The Business.
But, with Adelaide prices soaring 25.8 per cent over the past year, Mrs Grace said now was the time to make the most of those increases. “The property market is at a stage where we feel that we’re going to get our best price but it is a truly heart-wrenching decision about having to leave the family home.”
Kate and Phil Grace’s 1958 home in Adelaide’s Hampstead Gardens received multiple offers after their agent posted a brief sentence describing the three bedroom, one bathroom home on social media. (ABC News: Carl Saville). The 1958 three-bedroom, one-bathroom brick house on 800 square metres is in the sought-after Adelaide suburb of Hampstead Gardens, about 8 kilometres from the city centre. Agent Megan Tamlin had not even listed it properly before offers started coming in.
Adelaide real estate agent Megan Tamlin expects demand for homes in her city to remain high this year. (Supplied: Klein Real Estate)
“I put it on Facebook, not a paid ad, just a little organic ad … and my phone just started ringing,” agent Megan Tamlin explained. “One of these buyers was quite bold and was quite happy to offer a premium price. We’re still working through the details of that offer, the ink isn’t dry just yet, but it’s looking very, very promising for them.”
The deal is a sign of just how heated Adelaide’s property market remains.
Adelaide’s property market is continuing to see strong price growth. Ms Tamlin said interstate migration has put pressure on the local market.
“We have a stock shortage in Adelaide at the moment,” she said. “We find that for every property we’ve got we could sell it 10 times over or more. It’s very competitive. It’s a little bit crazy.”
Only Brisbane (+29.7pc) and Hobart (+26pc) have had bigger annual price rises. Regional areas (+25.5pc), Canberra (+23.8pc) and Sydney (+22.4pc) all had gains above 20 per cent over the past year.
Regional housing markets
“Regional housing markets aren’t immune from the higher cost of debt as fixed-term mortgage rates rise. These markets are also increasingly impacted by worsening affordability constraints as housing prices consistently outpace incomes,” said CoreLogic’s director of research Tim Lawless. “However, demographic tailwinds, low inventory levels and ongoing demand for coastal or treechange housing options are continuing to support strong upwards price pressures across regional housing markets.”
But even the weakest capital city market, Perth, had an 8.6 per cent rise over the past year, while Darwin (+12.3pc) and Melbourne (+12.5pc) had double-digit increases.
That has been a problem for Joanne Kim, who has had to rethink her dream of buying a small apartment in Sydney’s inner suburbs. Sydney resident Joanne Kim concedes she’s had to reassess where she can buy an apartment, as prices continue to climb. (ABC News: John Gunn)
While prices may have eased marginally last month, Sydney remains by far the most expensive city to buy a home. “I’ve been getting feedback from all my friends and family that maybe I’m being too ambitious, but I really love Drummoyne and Balmain,” she said. “I’ve been trying to look for one to two-bedroom apartments in those areas, but this is where things have drastically changed since last year. I think I was able to find two-bedders in Balmain between the $800,000 to $900,000 mark, but I can’t find anything like that these days.”
Apartments like that are now selling for almost twice as much, making it difficult for many people to buy. “Only last week, I was looking for an apartment that I thought was going to go for around the $800,000 to $900,000 mark, but it sold for $1.5 million.”
Ms Kim spends her weeks trawling real estate sites and her Saturdays at open homes in her continued pursuit of owning her own home and hopes increasing interest rates will work in her favour.
“I’m just hoping that prices stagnate for a little bit. I don’t want it to go up anymore. It’s just so difficult.”
Mr Lawless said there was a reasonable chance that Ms Kim might get her wish.
“The pace of growth in housing values started to ease in April last year, when fixed-term mortgage rates began to face upwards pressure, fiscal support was expiring and housing affordability was becoming more stretched,” he wrote.
“With rising global uncertainty and the potential for weaker consumer sentiment amidst tighter monetary policy settings, the downside risk for housing markets has become more pronounced in recent months.”