Home prices climb ahead of likely interest rate pause
Property prices re-accelerated in the nation’s two largest housing markets through October, with buyer competition in the spring selling season causing values to surge.
Property prices re-accelerated in the nation’s two largest housing markets, Sydney and Melbourne, through October with buyer competition in the spring selling season causing values to surge.
Housing researcher PropTrack’s monthly Home Price Index revealed property prices rose 0.6 per cent nationally in October, marking the 10th consecutive month of rises.
The gains represent a $65,200 increase to the cost of the typical home over the past year, equivalent to a 7.5 per cent lift.
The most significant growth was in Adelaide, where prices rose 1.2 per cent. Brisbane followed with an increase of 0.9 per cent, while Sydney, Perth and Hobart each inched 0.6 per cent higher.
Melbourne and Darwin rose 0.5 per cent, beating out Canberra’s 0.4 per cent increase.
REA Group senior economist Eleanor Creagh said some markets that had underperformed during the recent upswing had begun to quicken.
“Darwin, Hobart, Sydney and Melbourne are the markets seeing the fastest acceleration in annual growth at the moment,” Ms Creagh said.
“While those prior frontrunners or outperformers, Brisbane, Adelaide and Perth, are seeing the pace of annual growth easing. But prices are still continuing to rise at a fast pace.”
Growth rates in the regions were equal to those in the capital cities, both up 0.6 per cent, with the recent outperformance of regional Australia now evening out.
The strong momentum comes despite the Reserve Bank now likely to hold rates when it meets next week on the back of a surprise rise in inflation. The consumer price index for the September quarter recorded an annual rise of 3.2 per cent, a notable increase on the 2.1 per cent lift in the June quarter.
New building costs were among the largest inputs into the result, alongside rising electricity costs and rents.
SQM Research managing director Louis Christopher said the three RBA interest rate cuts in 2025 had contributed to higher costs.
“No doubt the interest rate cuts we’ve had this year have helped to increase borrowing power, and that generally generates into higher home prices, especially when our population is growing faster than what we can build,” he said.
The housing and markets researcher said Australia was on track to build 170,000 dwellings this year, with the population being expected to grow by 420,000 people.
“Those two numbers don’t mix well with each other,” Mr Christopher said.
“That is definitely one of the reasons why we’re seeing higher home prices and actually a bit of a pick-up in rental growth as well.”
Both Mr Christopher and REA Group’s Ms Creagh expect an interest rate hold on Tuesday, with the former forecasting a possible rate rise next year.
More Coverage
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout