Property prices keep breaking records but one major city is falling behind

Home prices have jumped 20% over the past year in Australia’s strongest property market, but values in some parts of the country are well off the pace or even sliding backwards.

Australia’s median home value reached a new record high in April, according to the latest PropTrack Home Price Index, rising 0.23% over the month and 6.6% over the past year.

But despite prices soaring even higher, growth has slowed from the faster pace experienced earlier this year.

PropTrack senior economist Eleanor Creagh said strong buyer demand has outweighed the rise in new listings this year and pushed prices to new highs. 

However, the data shows some heat may have come out of the market as stubborn inflation increases the likelihood that interest rates will remain on hold for some time.

“While demand remains robust, the pace of price growth is beginning to slow,” Ms Creagh said.

The stable interest rate environment has been a driver of confidence in the market, Ms Creagh said, with anticipation of rate cuts helping prices grow despite rates remaining high. 

But while the Reserve Bank is expected to keep rates on hold at its May board meeting next week, Ms Creagh said higher than expected inflation in the March quarter pushed back the timing of rate cuts.

”Most expect that the next move for interest rates will be down although the timing remains uncertain,” she said.

Prices are expected to keep rising in the months ahead, Ms Creagh said, with strong population growth, tight rental markets, low unemployment and home equity gains stimulating demand amid a shortfall in housing supply.

How home prices changed around the country in April

Prices rose in April in all the capitals apart from Melbourne and Hobart. 

New record highs were reached in Sydney, Brisbane, Adelaide and Perth, but other cities have fallen behind the nationwide uplift, including Melbourne, where lacklustre price growth has lagged that of the other major cities.

Perth was the strongest performer in April, with prices rising 0.85%, followed by Adelaide (0.55%) and Sydney (0.25%).

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Values in Perth have increased more than 20% in the past year, making it the strongest performing capital city market by far.

“Record low supply amid strong buyer demand has resulted in a sellers’ market,” Ms Creagh said.

Total property listings in Perth were 28.5% lower than a year ago, according to the latest PropTrack Listings Report, and homes are now selling quicker than in early 2022 before rates started rising.

Meanwhile, prices in Sydney reached a new high despite more homes hitting the market, with the city’s median house price reaching $1.385 million and the median apartment price sitting at $805,000.

“The influx of new listings this year has been matched by robust demand fuelling further price increases,” Ms Creagh said.

“However, growth momentum has slowed since the beginning of 2024, with both monthly and quarterly growth easing in April.”

At the other end of the spectrum, Hobart prices slid almost 2% in 12 months and are down about 8.5% since the peak.

Brisbane is now more expensive than Melbourne

Strong price growth in Brisbane has pushed the city’s median value higher than that of Melbourne, where values fell a little in April.

This is the first time in 14 years that properties in Brisbane have been more expensive than in Melbourne.

Melbourne prices declined by 0.1% in April, meaning prices are just 1.1% higher than a year ago and about 3.4% below the previous high. The city’s median dwelling value is now $805,000.

Patchy price growth in the Victorian capital has contrasted with the surge in Brisbane home values, which are 12.82% higher than a year ago after a 0.23% rise in April.

Brisbane’s median dwelling value is now $818,000, sitting $13,000 higher than Melbourne’s. 

“The supply of properties listed for sale in Brisbane has been consistently tight since the pandemic onset,” Ms Creagh said.

“At the same time, the city has experienced record net population inflows from the southern states.”

“Melbourne on the other hand has seen much weaker growth after the city recorded large losses to other states and regional areas through the pandemic period.”

“More recently buyers in Melbourne have consistently enjoyed more choice relative to other markets, with the total number of properties listed for sale sitting above the decade average since mid-winter, contributing to the lagging home price recovery in Melbourne.”

Place Estate Agents chief executive Damian Hackett said Brisbane’s price growth was driven by strong local demand, as well as ongoing interstate migration.

“Brisbane has really become recognised as a great place to live,” he said.

“We saw a huge increase in demand from Victoria when they were in their lockdowns,” he said. “We thought once everything settled down that maybe we’d see a bit of movement back, but it hasn’t given up.”

Nelson Alexander director Nick West said Melbourne’s lagging recovery was largely a hangover from the pandemic.

“The tax impost on Victorians and the Covid restrictions has played out a lot more than what we thought it may,” he said.

“That has impacted people and their sense to transact – most people are staying put and some people are moving interstate.”

“We’re starting to see a bit more confidence with engaging in real estate. I think we’ll see a sharp rebound in the next three to five years.”

Unit values in both cities have grown more than house values, with Melbourne units up 1.93% over the past year compared with just 0.95% growth for houses.

Meanwhile, Brisbane unit values jumped 0.94% in April alone, and 15.08% in the past 12 months, with houses rising just 0.1% over the month and 12.44% over the year.

Stubborn inflation delays rate cuts

Major lenders Westpac and Commonwealth Bank have both updated their forecasts for the timing of the first rate cut in light of the higher than expected inflation result in the March quarter.

Westpac chief economist Luci Ellis said rates would likely remain on hold in May, but inflation was falling slower than the RBA hoped.

“Given the slower progress on disinflation this quarter and the lower starting point for labour market slack, we now expect the first rate cut to occur after the November meeting, rather than September as previously expected.”

Australia’s largest lender Commonwealth Bank likewise expects rate cuts to come later than previously forecast.

“Monetary policy will need to stay at a restrictive setting for longer to bring inflation back towards the mid-point of the RBA’s target band,” CBA head of Australian economics Gareth Aird said. 

“We now expect only one 25bp interest rate cut in 2024 compared with 75bp of easing previously.”