PropTrack Home Price Index – May 2024

The PropTrack Home Price Index shows national home prices lifted 0.30% to hit a new record in May, bringing prices up 2.73% year-to-date.

With housing supply unable to meet demand, national home prices have cycled through 17 consecutive months of growth to hit a fresh peak in May. Prices are now 6.68% above May 2023 levels and up 9.58% from their December 2022 low.

Despite a rise in the number of homes for sale this year, strong population growth, tight rental markets, and home equity gains continue to bolster strong demand. Meanwhile, building activity remains challenged by capacity constraints and higher costs, with consequent tight housing supply pushing both prices and rents higher.

This imbalance between supply and demand has offset the higher interest rate environment and the impact of affordability constraints, with home prices continuing to lift.

Despite some easing in the rate of population growth and more stock on market, home prices are expected to lift further in the months ahead. However, it is likely the pace of growth will continue slowing through the seasonally quieter winter period, particularly with interest rate cut expectations pushed out to late-2025.

Key findings from the May 2024 report:

•National home prices lifted 0.30% to hit a new record in May, bringing prices up 2.73% year-to-date. Prices are 6.68% above May 2023 levels and up 9.58% from their December 2022 low.

•Prices in the combined capital cities rose 0.41% to a new peak in May. Capital city prices are now up 7.22% year-on-year, though performance has diverged between capitals as well as regional areas.

•All capitals bar Hobart (-0.13%) and Canberra (-0.21%) saw prices rise in May, though the pace of home price growth has slowed since the end of the summer in every capital city.

•Perth (+0.73%), Brisbane (+0.67%) and Adelaide (+0.53%) recorded the strongest price growth in May. In keeping with the trend seen for much of the past two years, these markets remain the strongest for annual growth, with Perth prices up 20.58% over the past year, while Adelaide and Brisbane have grown 14.49% and 13.69% respectively.

•Brisbane prices are 18.15% above their December 2022 low, as a result Brisbane is now the second-most expensive capital on par with Canberra and ahead of Melbourne for the first time since 2009, following a period of consistently strong growth.

•Prices in capital cities have outpaced regional areas over the past year. This trend continued in May, with prices in the combined regional areas remaining flat while regional NSW (+0.16%) and regional Tasmania (+0.12%) were the only regional markets to see price growth in May.

Robust homebuying demand fuels further price increases

National home prices increased for the 17th consecutive month, lifting 0.30% in May as the home price upturn remains in play.

Despite a rise in the number of homes for sale this year, strong population growth, tight rental markets, and home equity gains are all contributing to demand, while the supply side of the housing market has fallen short and as a result, home prices reached a fresh peak in May as robust demand has continued to push prices upwards.

The stable interest rate environment has also been a driver of confidence among buyers and sellers, while ongoing home price rises are likely incentivising many to overcome affordability challenges and transact with the expectation of further growth.

Capital cities retain their lead over the year

Capital city markets led 2023’s price upturn while prices in regional areas were slower to recover.

This trend has continued in 2024 with prices in the combined regional areas remaining flat while regional NSW (+0.16%) and regional Tasmania (+0.12%) were the only regional markets to see price growth in May.

Home prices in the combined capital cities are up 2.97% year to date and up 7.22% year-on-year after climbing 0.41% in May to a fresh price peak. While prices in regional areas were flat in May they remain at record high levels set in April, now up 2.10% year to date and up 5.30% on May 2023 levels.

Price upturn remains robust in most capitals, but growth has slowed

All capitals bar Hobart (-0.13%) and Canberra (-0.21%) saw prices rise in May, though the pace of home price growth has slowed since the end of the summer selling season in every capital city.

Perth has maintained its streak of relative outperformance and was the strongest market in the country for monthly (+0.73%) and annual (+20.58%) home price growth. Prices surged 0.73% in May marking the 22nd consecutive month of growth.

Supporting home prices, buyers in Perth are facing close to record-low choice with total stock on market falling more than 20% over the past year. Although housing affordability has declined significantly as interest rates have risen, WA remains the most affordable state across Australia, which is likely supporting prices as well.

After Perth, Adelaide (+0.53%), and Brisbane (+0.67%) saw the strongest growth. In fact, Brisbane prices are now 18.15% above their December 2022 low, and as a result Brisbane is now the second-most expensive capital on par with Canberra, following a period of consistently strong growth.

Throughout the past year smaller capitals have outperformed, and this trend persisted into May with Perth, Adelaide and Brisbane recording the fastest monthly growth in May.

Perth, Adelaide and Brisbane remain the strongest markets over the past year with prices 20.58%, 14.49% and 13.69% above May 2023 levels respectively. Year to date these capitals are also the strongest with prices up 6.98% in Perth, 5.06% in Adelaide and 4.73% in Brisbane.

The relative affordability of these cities’ homes, population growth, and very tight rental markets are supporting home values, while low stock levels are intensifying competition amid strong buyer demand resulting in a sellers’ market with home prices continuing to rise at a fast pace in 2024.

Perth, Adelaide and Brisbane have all experienced the largest falls in total listings over the past year amongst the capital cities.

Persistent strong growth in Brisbane has pushed up dwelling values in Brisbane to be on par with Canberra and outpace Melbourne, with Brisbane’s median value sitting at $834,000.

In Sydney and Melbourne, a surge in selling activity has seen the flow of new listings hitting the market this year increasing, improving choice for buyers.

Despite the increase in new listings hitting the market in Sydney, buyer demand has kept up and Sydney home prices lifted 0.42% in May to a fresh price peak, bringing prices up 3.09% year-to-date.

Prices were 7.01% above May 2023 levels and 11.89% above their November 2022 low. However, growth momentum has slowed consistently since February as buyers benefit from more choice.

Melbourne home prices lifted 0.23% in May, reversing the small falls (-0.05%) seen in April. Prices are up 0.87% year-on-year but remain 3.08% below their March 2022 peak.

Melbourne’s recovery is lagging Sydney and Brisbane, where prices fully recovered from 2022’s falls last year. Prices in Melbourne have regained just under half of their decline, up 2.42% from their January 2023 low.

In April 2024 total listings in Melbourne were 21.4% higher than in April 2023, and higher property taxes may be playing a part here. As a result 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-2023. This is contributing to softer selling conditions with buyers likely having the upper hand – a reflection of the more balanced market conditions with Melbourne buyers having much more choice than is typically the case.

Prices in Hobart continued to fall in May, declining 0.13% to now sit 1.93% below levels seen this time last year. Hobart remains the weakest capital city market when comparing annual price growth (-1.93%), as well as the change from peak (-8.97%). However, this comes following a period of outperformance during the pandemic as well as strong growth in the years preceding. Home prices in Hobart are still up 34.9% since March 2020.

House and unit prices lift

House prices have grown more quickly over the past year and are now 6.97% higher than a year ago, while unit prices are up 5.26% on their year ago levels.

This continues the trend seen throughout the pandemic – house values have experienced rapid growth up 46.9% on pre-pandemic levels, while the growth in unit values has been more moderate up just 22.6% on pre-pandemic levels.

The growth in home values over the past few years has been a tale of a two-speed market and while typically houses command a premium over units, and over the long run houses tend to outperform units with respect to price growth, since the onset of the pandemic, house price outperformance reached historic extremes.

The impact of the pandemic on housing preferences played a part here.

In May prices for detached houses nationally grew 0.33% in the month while unit prices grew 0.14%. This growth brings house prices nationally up 2.78% year to date, with unit prices up 2.45% with house once again gathering ground on units.

Housing affordability has deteriorated significantly as interest rates have risen and the apartment market offers a relative discount.

Strong demand for inner city living post-pandemic, coupled with the rapid rate of population growth and housing supply constraints alongside the relative value units offer are expected to bolster buyer demand and pricing in the apartment market, though houses are once again outperforming so far this year.

Markets in regional Queensland, SA and WA continue to record strong growth

WA regions account for five of the top 10 fastest growing regions in the past year, with northern Adelaide and parts of southern and western Brisbane making up the remainder.

Perth has been the strongest performing city — and indeed the strongest performing market overall — in the past year, with prices up almost 25% in some parts of the city in that same period.

Outlook

Home prices in 2023 remained resilient to the higher interest rate environment and this improvement in conditions that materialised in 2023 has continued in 2024.

The stable interest rate environment has likely been a driver of confidence among buyers and sellers, and with housing supply unable to meet demand across the country, home prices reached a fresh peak in May as robust demand has continued to push prices upwards.

However, in every capital city the pace of home price growth has slowed since the stronger pace seen through the summer selling season.

Higher interest rates and inflation are squeezing household budgets, and many remain concerned about the economic outlook. But property prices are expected to lift further this year, with housing demand buoyed by population growth, tight rental markets, and home equity gains, alongside the stable interest rate environment.

Further, ongoing home price rises are likely incentivising many to overcome affordability challenges and transact with the expectation of continued growth.

Meanwhile, the supply side of the housing market has fallen short in responding to substantial demand. Building activity is at decade low levels, exacerbating the housing supply shortage.

This imbalance between supply and demand has offset the higher interest rate environment and deterioration in affordability and is expected to continue to do so, fuelling further price rises.

Despite some easing in the rate of population growth and more stock on market, home prices are expected to lift further in the months ahead.

But it is likely the pace of growth will continue slowing through the seasonally quieter winter period, particularly with interest rate cut expectations pushed out to late-2025.

The smaller capital city markets, Perth, Adelaide, and Brisbane are likely to maintain their outperformance despite growth slowing, as very low stock levels intensify competition amid strong buyer demand.

Methodology: The PropTrack Home Price Index measures the monthly change in residential property prices across Australia to provide a current view on property market performance and trends. PropTrack Home Price Index uses a hybrid methodology combining repeat sales with hedonic regression. The repeat sales method matches resales of the same property while the hedonic regression estimates values based on the value of similar properties. The hybrid model allows two properties in the same Australian Bureau of Statistics Statistical Area 1 (SA1) region, of the same type, to be matched and controls for differences in property characteristics, as in a hedonic regression. The PropTrack Home Price Index is a revisionary index with the whole back history updated monthly with current transaction information.

** This report uses realestate.com.au internal data and data sourced from third parties, including State government agencies. It is current as at the time of publication. This report provides general information only and is not intended to constitute any advice and should not be relied upon as doing so. If you wish to cite or refer to this report (or any findings or data contained in it) in any publication, please refer to the report as the ’PropTrack Home Price Index Report – November 2023’. See report for Copyright and Legal Disclaimers.