Most capital city home values remain below previous market highs when adjusted for inflation, according to new research from RP Data.
The study shows unadjusted home values in the capitals are 0.7 per cent higher than previous September highs.
However, when these figures are adjusted for inflation, the combined capital cities values are 6.5 per cent lower than previous peaks.
“Over recent years, the housing market has been characterised by higher levels of volatility and subsequently lower levels of home value growth,” RP Data analyst Cameron Kusher said.
“Conversely, inflation has continued to occur at a time when home value growth in most cities has failed to maintain pace,” he said.
Sydney and Canberra are the only cities to record a market peak on the unadjusted data for September, coming in 6.6 per cent and 0.5 per cent above previous records.
However, when adjusted for inflation, Sydney remains 6.6 per cent behind previous highs, while Canberra is 3.3 per cent behind.
All other cities recorded lower unadjusted September results, a lag that became more pronounced when accounting for inflation.
Mr Kusher found most cities had experienced peaks in the early and mid-2000s.
Sydney values peaked in the first quarter of 2004, Brisbane in the first quarter of 2008, Perth in the third quarter of 2007 and Hobart in the final quarter of 2007.
The Melbourne market experienced a more recent high, peaking in September 2010.
Given costs associated with goods and services have risen faster than house prices, Mr Kusher said housing is comparatively affordable.
“Over the coming months, it will be interesting to see if value growth in Sydney, Melbourne and Perth can be maintained, as we foresee some potential affordability constraints entering these markets, given the rapid rate of value growth,” Mr Kusher said.
“Conversely, it will be interesting to see whether some of the markets that have seen larger value corrections such as Brisbane, Adelaide and Hobart start to see an improvement in value growth conditions.”