Property prices finish financial year higher ahead of interest rate decision

Homeowners facing rising mortgage costs in most Australian capital cities can breathe a sigh of relief after finishing the financial year in the black.

Auctioneer Clarence White selling a home in Sydney last month. Picture: Jane Dempster/The Daily Telegraph

Capital city property prices have ended the financial year higher – evidence that a dozen interest rate rises have failed to dampen ­appetite.

Research firm PropTrack’s monthly Home Price Index ­revealed a 0.06 per cent rise in ­annual property values across the nation’s eight capitals in the year to June, with only two experiencing a fall during June.

Nationally, prices were still down 0.11 per cent over the past 12 months when accounting for ­regional movements. The combined capital city ­median rose 0.41 per cent last month.

While small, the positive trend defies predictions at the start of the rate cycle of significant price falls as mortgaged homeowners faced the reality of the highest rates in more than a decade.

PropTrack economist Angus Moore expects prices to continue climbing through the remainder of the year.

“Interest rates will continue to be a headwind for prices but, ­unlike in 2022, the peak of interest rates is likely close,” Mr Moore said.

“Higher interest rates are being offset by a limited flow of new properties hitting the market, as well as strong fundamentals for housing demand.

“While the total number of properties listed on real­estate.com.au has picked up compared to a year ago, the flow of new properties hitting the market remains subdued, which is creating a more competitive environment for properties coming to market.”

The Reserve Bank of Australia is to meet on Tuesday, with economists torn on whether interest rates will be lifted for the 13th time since May 2022.

Smaller capital cities have continued to outperform. Over the past year, property values have risen more than 5 per cent in Perth and Adelaide and have returned to peak prices, recording respective rises of 0.34 per cent and 0.45 per cent through June.

Sydney is also up nearly 1 per cent over the year, reporting 0.63 per cent growth last month. Brisbane’s slower rise through June of 0.08 per cent nudged it into positive annual territory (up 0.07 per cent).

Increases were recorded in the ACT (up 0.11 per cent) and Melbourne (up 0.24 per cent) through June, but the country’s second and third most expensive cities were still about 3 per cent cheaper than last year.

Hobart and Darwin were the only capitals to record price ­decline in June, down 0.36 per cent and 0.08 per cent, respectively. Hobart has been the weakest performer over the past 12 months after a strong few years, with prices now 7.15 per cent below their peak.

Regional markets are down 0.55 per cent over the year, but up a marginal 0.05 per cent last month.

Winter typically signifies the cyclical low point in the real estate calendar, as operations slow ahead of the spring selling season. However, auction clearance rates have proven unusually strong in recent months, underpinned by demand. Mr Moore said this was a sign prices would likely remain elevated.