Home prices hit new peak in June but growth slowing as some capitals retreat

Home prices have continued their inexorable march upwards on a national basis but parts of the market are slowing and some east coast capitals are now in reverse.

National home prices edged up by 0.18 per cent to a new peak in June but they recorded the slowest pace of monthly growth since ­December 2022. Picture: NCA NewsWire / Max Mason-Hubers

Home prices have continued their inexorable march upwards on a national basis, marking an 18-month run of increases, but parts of the market are slowing and some east coast capitals are now in reverse.

The mixed picture for the housing market presents a fresh dilemma for the Reserve Bank as it seeks to bring inflation under control while also preserving the ­momentum in a fragile economy that is being hit by company collapses, notably in construction.

National home prices edged up by 0.18 per cent to a new peak in June but they recorded the slowest pace of monthly growth since ­December 2022 as interest rate increases hit affordability.

But owners are ahead, with home prices up 10.14 per cent from their December 2022 low, lifting 3.14 per cent year-to-date to sit 6.55 per cent above their June 2023 levels.

Price growth has slowed in the capital cities and bumped up by just 0.22 per cent in June, marking a 6.91 per cent lift year-on-year.

“National home prices have ­cycled through 18 consecutive months of growth to hit a fresh peak in June despite the pace of growth slowing as winter begins,” PropTrack said.

“Although the number of homes hitting the market this year has lifted, strong population growth, tight rental markets and home equity gains continue to bolster demand.”

The research house said building activity remained challenged, resulting in the chronic shortage of housing being exacerbated by a lack of new construction, with rate pauses also influencing the ­market.

“Interest rate stability has sustained buyer and seller confidence, while the continuous rise in home prices is motivating many to overcome affordability challenges and transact with the expectation of further growth. As a result, demand is outpacing supply, pushing prices and rents higher and offsetting the higher interest rate environment,” PropTrack said.

The market could see a burst of activity this month as tax cuts come into play. “From July, tax cuts will lift household incomes, increasing borrowing capacities and buyers’ budgets, further supporting price growth. Although home prices are expected to rise in the coming months, they will likely maintain a slower pace through the seasonally quieter winter ­period, particularly with increasing uncertainty around interest rates,” PropTrack said.

Over the past quarter, every capital saw a slowdown in home price growth, as Perth (+0.65 per cent), Brisbane (+0.5 per cent) and Adelaide (+0.45 per cent) recorded the strongest growth in June. Meanwhile Melbourne (-0.43 per cent), Hobart (-0.21 per cent), Darwin (-0.11 per cent) and Canberra (-0.05 per cent) were weakest.

A split has emerged with Perth, Adelaide and Brisbane recording the fastest pace of growth for much of the past two years, with Perth prices up 22.52 per cent in the past year, while Adelaide and Brisbane have seen increases of 14.61 per cent and 14.14 per cent ­respectively. Capital city prices have outpaced regional areas over the past year and did so again in June, despite slowing growth.

Sydney home prices lifted 0.41 per cent in June, the slowest pace of monthly growth since December 2023. But they still hit a new peak, up 3.57 per cent in the year to date, 6.39 per cent above June 2023 levels and 12.38 per cent above their November 2022 low.

More properties hitting the market this year has been met with strong demand, driving further price growth. However, the pace of growth has eased steadily since the end of the summer selling season.

Melbourne home prices fell 0.43 per cent in June, down 0.07 per cent year-on-year, in keeping with the sluggish Victorian market that has been hit by taxes and a loss of confidence. Home prices in the city are 3.89 per cent below their March 2022 post-pandemic peak.

Brisbane has surpassed Canberra to become the second-most expensive capital following a period of consistently strong growth. Prices there are 19.96 per cent above their December 2022 low, putting values ahead of Melbourne and Canberra.

Brisbane remains one of the strongest performing markets over the past year, with home ­prices now 14.14 per cent above June 2023 levels. Prices lifted a further 0.5 per cent in June, reaching a new peak, although the pace of growth is slowing compared to earlier in the year.

The runaway Perth market has maintained its outperformance and remains the strongest market in the country for monthly (+0.65 per cent) and annual (+22.52 per cent) home price growth. The relative affordability of the West Australian capital’s homes, population growth and a tight rental market are also supporting home values.