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Units growth outpace house prices
Australia’s property market has reached its strongest levels over the last year, with units outperforming houses as several capitals have hit peak dwelling prices, according to recent data.
Property prices have hit new heights across several capital city markets, growing at the fastest rate in four years, according to the latest Domain’s September Quarter House Price Report.
Domain’s data showed that Sydney, Brisbane, Perth, and Adelaide hit record median dwelling prices, while recovering markets in Melbourne, Canberra, and Darwin reached a tipping point, recording their highest values in years.
Growth in unit values has begun to outpace houses in several capital city markets, including Brisbane, Adelaide, Perth and Darwin, where prices climbed by over 10 per cent over the past year.
Domain chief of research and economics Nicola Powell told REB that unit growth has been driven by their relative affordability for first-home buyers and heightened investor interest.
“What unites these markets is that they have seen a shift in investor activity compared to what we have historically seen,” Powell said.
“These markets have been running hot for a while, and I think units are a spillover of affordability.”
“They create an option that is much more affordable for first-home buyers who are struggling to purchase a house.”
Powell said that the growth trends were seeing a reshuffling across the major markets.
“We’re really seeing some pricing hierarchies changing across our different cities,” she said.
Brisbane
Brisbane’s booming real estate market climbed its way to Australia’s second most expensive city, with prices exceeding $1.1 million.
The annual 3.7 per cent price increase saw homes in Brisbane jump by roughly $39,000, while units rose by 14.1 per cent over the past 12 months.
Powell said that while the “river city” has seen consistent growth for an extended period, it was also accelerating.
“I think the milestone for Brisbane is that it is now the second most expensive capital city to purchase both a house and a unit.”
“That has never happened before.”
Powell said there were a variety of factors continuing to drive Brisbane’s prices upwards, with infrastructure, investor activity and a chronic undersupply of housing among the most impactful.
Sydney
The median house price in Sydney climbed by 3.4 per cent from last quarter, with properties increasing in value by almost $60,000 in just the previous three months.
Sydney remains the most expensive city in the country with a median house price of $1.75 million.
Powell said that if current growth trends continue as the data predicts, the East Coast hub could reach a median house price of $2 million as early as 2027.
However, units in Sydney have grown at a slightly more modest rate, climbing by 1.9 per cent over the September quarter and just 2.7 per cent over the past 12 months.
Melbourne
Powell said that Melbourne’s housing resurgence is now underway, with a 2.2 per cent increase taking the market to its strongest quarterly gain and the highest median price in almost four years.
Similarly, units in the Victorian capital have grown slowly over the past year, by 4.3 per cent, leaving Melbourne just 2 per cent below its previous peak.
With only $10,000 separating Melbourne dwellings from a new high, Powell said the market is building momentum heading into the new year.
“Melbourne is really in an established recovery now,” Powell said.
Adelaide
Similar to the rest of the country, Adelaide also soared to new highs, with house prices growing by the highest rate over the past year of any capital city, increasing by 10.5 per cent.
Powell said that while Adelaide is still showing robust signs of growth, it isn’t as hot as it once was.
“I think conditions are changing, and the pressure cooker is starting to be released slightly,” she said.
Units in Adelaide have also shown significant growth recently, buoyed by five per cent growth over the quarter and almost 15 per cent annually.
Perth
Rising prices in Perth have the city on the verge of joining the $1 million club, with a value increase of 1.6 per cent, leaving the WA capital sitting approximately $19,000 shy of the seven-figure mark.
With recent REIWA data showing houses in Perth flying off the market in just 8 days, the increased activity has Domain forecasting prices will surpass the $1m mark before the end of the year.
Units in Perth have risen by four per cent over the September quarter, to a national-leading growth rate of 16.4 per cent, and now sit at approximately $560,000.
Darwin
Houses in Darwin have both the lowest median price in the country and the fastest rate of growth over the past quarter, rising by 5.3 per cent.
When it comes to unit price growth, Darwin takes the cake, with apartments in the Northern Territory capital climbing by over six per cent over the September quarter.
Darwin has seen a surge in prices over the past year, with experts attributing the rapid growth to affordability, low supply levels, and increased investment activity.
Powell said that the affordable options for buyers, combined with strong rental yields, were attracting plenty of investors to the Northern Territory.
Canberra
Houses in Canberra are the third most expensive to buy nationally, with the median price climbing by 2.4 per cent to sit just below Brisbane's $1.1 million mark.
Units in Canberra were the only market across both categories that experienced negative growth from the mark set in the previous quarter, with prices dropping by 1.5 per cent in the nation’s capital.
Powell said that government intervention had continued to push property prices higher nationwide.
“Three RBA cuts this year, rising consumer confidence, low levels of supply and the strongest auction clearance rates in over two years are driving house and unit price growth across Australia’s capitals.”
“With the Australian Government’s 5 per cent Home Guarantee now underway, we expect this momentum to accelerate further into the final quarter of the year, supporting both houses and units as buyers chase better value in a competitive market,” she concluded.