Regions where home prices are booming again

Home values in these key areas have boomed again amid a wider recovery in the housing market. And experts are warning more rises are likely to come.

Home prices are booming again in Australia’s smaller capital cities.

PropTrack’s latest Home Price Index released this week showed home prices had record annual growth in Perth, Brisbane and Adelaide.

Perth price growth topped the nation with an average annual increase in values of 18.62 per cent, while growth in Adelaide and Brisbane was 13.47 per cent and 12.9 per cent, respectively.

PropTrack attributed the growth to record low housing supply, strong buyer demand and the affordability of these cities relative to larger capitals – which have made them a magnet for interstate investors.

Population growth and tight rental markets encouraging tenants to become first-home buyers also supported property values, PropTrack said.

Growth conditions varied more in Sydney and Melbourne, with cheaper city regions tending to record stronger growth.

Auctioneer Damien Cooley said sales results varied across areas. Picture: David Swift

Perth growth has been leading the nation.

In the case of Sydney, cheaper city regions in the south and west led the city’s march upwards in prices over the last year as property buyers sought out markets where they could get better bang for their buck.

Home Price Index figures showed the top growth markets over the past 12 months were the Canterbury-Bankstown, St George and Parramatta regions.

House prices in these regions jumped up by nearly 12 per cent over the past year, well above the 8.11 per cent rise in values across Greater Sydney as a whole, PropTrack’s latest Home Price Index showed.

Adelaide annual property price growth. Source: PropTrack

Brisbane annual property price growth.

Other city markets that recorded substantial growth in real estate values included Blacktown, where house values increased by just shy of 10 per cent, and the eastern suburbs, where unit prices increased about 12 per cent.

Housing experts said the top growth markets across Sydney, with the exception of the eastern suburbs, were attracting a lot of buyers who had been priced out of surrounding areas due to interest rate hikes in 2022 and 2023.

It comes as home prices across Greater Sydney climbed to a new record level over March, with experts pointing to housing shortages pressuring property buyers to pay more.

Home values lifted 0.4 per cent over March to hit a fresh peak and are now an average of about 8.11 per cent higher than they were at this time last year.

Building activity has been too slow to match rising housing demand.

Home price rises across Sydney over the year to April 2024. Source: PropTrack

PropTrack’s latest Home Value Index published Monday showed Sydney’s median dwelling value of $1.06m is also about 2 per cent higher than it was at the start of the year – a rise equivalent to about $20,000.

Sydney’s continued growth has been in-step with a national upswing in property values, with experts forecasting more rises to occur later this year because of high buyer demand relative to housing supply.

PropTrack economist Eleanor Creagh said expectations of a rate cut later this year were boosting buyer activity.

This was occurring at a time when the city remained well short of the housing needed to accommodate soaring population growth, she said.

A recent uptick in property listings was not enough to offset the increased demand for housing, Ms Creagh added.

PropTrack senior economist Eleanor Creagh said price rises were likely to continue rising this year.

“Despite an increase in the number of homes hitting the market this year, demand has absorbed the surge leading to further price increases,” she said.

“Housing demand is also being buoyed by population growth, tight rental markets, resilient labour market conditions and home equity gains.

“Meanwhile, the sharp rise in construction costs and labour and materials shortages have slowed the delivery of new builds, hampering the supply of new housing.

“The imbalance between supply and demand is likely to further offset the impact of affordability constraints and a slowing economy. As a result, prices are expected to remain on the rise in the months ahead.”

Damien Cooley, auctioneer and director at auction house Cooley, said the property market remained “relatively strong” but there was a lot of variability among sales results across housing categories and areas.

He noted that there was an increase in buyers bidding at auctions, but unlike during the boom market period of late 2020 and 2021, buyers tended to be more discerning.

Ray White Chief Economist Nerida Conisbee. Picture: Tertius Pickard

“Not everything is selling well,” he said. “The A-grade and B-grade homes, which are basically the best properties, are selling very well …

“D-grade, which might be a property on a busy road or a property with something buyers might not like, have to be priced very well.”

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Ray White chief economist Nerida Conisbee said NSW was not building enough houses for the current supply and demand balance to change anytime soon.

She said double digit rises in property prices were not “out of the question” this year, especially if the Reserve Bank cut interest rates.

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It comes as analysis from MCG Quantity Surveyors showed recent price increases had sharply raised the deposit hurdle for new buyers.

A home purchaser wanting the average Sydney house needed nearly $250,000 in savings to be able to stump up a 10 per cent deposit, stamp duty and lenders mortgage insurance. A purchaser needed about $140,000 in upfront savings to purchase the average apartment if using a 10 per cent deposit.