Price Growth Variability Reshapes Rankings of Australia's Costliest Cities

The surge in home prices in Brisbane, the capital of Queensland, has propelled the city to become Australia's second-most expensive city. This significant increase in home prices has resulted in new record highs, positioning Brisbane just behind another major Australian city in terms of costliness.

The PropTrack Home Price Index indicates that property prices continued to rise across Australia in May. The median home value in the country increased by another 0.3% over the month, reaching a new record high.

In May, home values increased in six of Australia's capital cities, with Sydney, Brisbane, Perth, and Adelaide setting new price records. This data has led to a reshuffling in the rankings of the capitals, with Brisbane now tied with Canberra as the nation’s second-most expensive capital after Sydney. Both Brisbane and Canberra now have a median home value of $834,000, which includes both units and houses. Brisbane experienced a price jump of 0.67% in May, while prices in Canberra fell by 0.21%.

When considering property type, Canberra houses remain more expensive than Brisbane, with a median value of $961,000 compared to $930,000 for Brisbane houses. However, Brisbane units have surpassed Canberra units in price, with a median value of $632,000 compared to $605,000 for Canberra units. Additionally, Melbourne has slipped to fourth place, with a median home value of $806,000.

‍May Property Market Recap: Fluctuations in Australian Property Prices‍

Sydney retains its position as Australia's most expensive city, with prices increasing by 0.42% in May and by about 7% over the past year. Despite ongoing growth in property prices, the momentum has slowed since February, with buyers benefiting from increased choice as more properties become available on the market.

PropTrack senior economist Eleanor Creagh noted that although there were more homes for sale across the country, the increase in supply still fell short of satisfying the demand from buyers, leading to further price rises.

"Despite the 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," she stated.

While prices are at or near record highs in most parts of the country, many buyers are still eager to enter the market to capitalize on the rising values, according to Ms. Creagh.

"Ongoing home price rises are likely incentivising many to overcome affordability challenges and transact with the expectation of further growth," she added.

Ms. Creagh anticipates further price growth in the coming months, albeit not at the rapid pace observed earlier this year.

"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," she explained.

‍What Factors are Fueling Brisbane's Robust Price Growth?

Brisbane's ascent to become the second-priciest capital is fueled by remarkable price growth, with values soaring by an impressive 68% since the onset of the pandemic.

Recent data shows that prices in the Queensland capital have surpassed those in Melbourne for the first time in 14 years. This surge is attributed to strong population inflows from the southern states and a limited supply of homes for sale, which have collectively exerted upward pressure on prices.

Brisbane continues to stand out as one of the most robust markets, with home prices now soaring 13.69% above May 2023 levels," remarked Ms. Creagh.

She further noted that unit prices in Brisbane experienced the fastest growth rate across the nation in May, surging by 0.86% over the month and 15.74% over the year.

Colin Wash, selling principal at Ray White Inner City Apartments, attributed this strong price growth to a resurgence following a period of underperformance. He highlighted population growth as a key factor driving up rental yields and rekindling investor interest in the market.

Colin Wash emphasized the significant rebound in inner-city apartment rental yields during the COVID-19 pandemic, surpassing pre-pandemic levels.

He underscored population growth as the primary driver for both rents and property prices, indicating a positive trend for Brisbane's real estate market.

Wash highlighted a shift in perception, noting that Brisbane inner-city apartments are now viewed favorably as high-yielding, cash flow positive investments, even amidst the backdrop of relatively high interest rates.

Eleanor Creagh noted a slight deceleration in the rapid pace of price growth observed in Brisbane during the early months of 2024.

Conversely, Canberra has experienced modest growth of 1.23% over the past year, while Melbourne saw a 0.87% increase during the same period. Despite this, both cities remain more affordable compared to early 2022, before the onset of rising interest rates.

Since the pandemic, Canberra's property values have surged by approximately 37%, while Melbourne's have risen by 17.5%.

Price Trends in Perth and Adelaide Show Persistent Growth

"Perth Leads the Pack: May's Strongest Capital City Market with a 0.73% Monthly Increase and 20.58% Yearly Rise in Prices.

High demand and a scarcity of available properties have driven up prices in the Western Australian capital. According to Ms. Creagh, tight supply coupled with robust buyer demand has created competitive conditions, fueling significant price growth.

Buyers in Perth are experiencing near-record low options, with total stock on the market dropping by over 20% in the past year."

Nikki de Rijcke, a real estate agent and director at JW Residential in Perth, highlighted declining stock levels as a significant challenge in the local market. She noted that emotional buyers were prevalent, often leading to increased spending among prospective buyers who had been searching for properties for an extended period.

Despite the substantial growth in property values benefiting homeowners, Ms. de Rijcke observed that this trend hadn't resulted in a corresponding increase in homes listed for sale. Many homeowners, she explained, felt constrained by the high prices in the market and opted to stay in their current homes rather than selling and buying anew.

Adelaide boasts the second-strongest annual growth in home values, with its median value experiencing a robust 14.49% increase following a 0.53% jump in May.

The South Australian capital continues to be driven by affordability, particularly evident in the northern suburbs, where properties are generally more reasonably priced.

Despite substantial interest rate hikes since May 2022, Adelaide's housing market has remained resilient, buoyed by the comparative affordability of its homes.

Regional Tasmania Hits New Peak: Surpassing Previous Records

The latest data underscores a notable divergence in price trends between Hobart and regional Tasmania.

In Hobart, the median home value experienced a slight decline of 0.13% in May and a more significant decrease of 1.93% over the past year.

While Hobart continues to grapple with the aftermath of a downturn sparked by interest rate increases, the rest of Tasmania paints a contrasting picture. The median home value outside of Hobart has surged to a record high, climbing nearly 2% over the past year.

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Source: Realestate.com.au