Property prices on the up ahead of likely Reserve Bank rate pause

Property prices have risen again, with one city reaching a new all-time high, ahead of the Reserve Bank meeting to decide on rates on Tuesday.

Housing researcher PropTrack’s monthly Home Price Index has revealed another 0.16 per cent increase in property values through July. Picture: Sam Ruttyn

Property prices nationally are now higher than they were a year ago as the likelihood of a further rate rise becomes more uncertain when the Reserve Bank meets on Tuesday.

Housing researcher PropTrack’s monthly Home Price Index has revealed another 0.16 per cent increase in property values through July, marking seven months of consecutive price growth.

The continued increases have reversed more than half of the market falls of last year, with prices 1.36 per cent above last July’s ­levels.

At the current pace of increases, the market is on track to hit new highs as soon as the new year, coinciding with the peak of the rate cycle coming into view for homeowners.

PropTrack senior economist Eleanor Creagh said bolstered ­migration, tight labour markets and the rental crisis were helping to boost demand for housing, as demonstrated by strong auction clearance rates in the face of higher stock levels.

“We’ve got stronger housing demand relative to the supply of new listings hitting the market,” Ms Creagh said.

“That’s led to more competitive selling conditions and really underpinned home prices.

“With interest rates being, I think, at their peak or if not at their peak very close to peak, potentially those in the market now are continuing to feel comforted by increased certainty around future borrowing costs and around economic conditions.”

Sydney rose 0.28 per cent through July but it was Brisbane that proved the first capital city to return to peak pricing since the end of the boom, with a rise of 0.37 per cent in July taking the River City to a new price record. Adelaide (up 0.62 per cent) and Perth (up 0.36 per cent) are also ­recording new highs each month.

Melbourne prices held largely steady (up 0.01 per cent), while harder-hit Hobart increased 0.21 per cent.

Darwin and the ACT were the only capital cities to marginally decline over July, down 0.08 per cent and 0.02 per cent respectively.

Regional property prices rose 0.16 per cent last month.

More than two-thirds of economists and property experts are ­expecting the Reserve Bank to hold fire on another rate rise on Tuesday, according to a new survey by Finder, after better-than-expected inflation figures and a pullback in consumer retail spending.

Ms Creagh said seller confidence is returning, with the test of the market to come in spring when listing levels traditionally rise.

“I think it would be reasonable to expect that if we do see a substantial pick-up in new listings, then we could see the pace at which prices have grown maybe slowing but I don’t necessarily hang my hat on it,” she said.