Australia’s housing market continues its robust ascent, with prices rebounding strongly in January after a minor dip last year. According to a report from Ray White, the national median house price currently hovers just under $930,000, propelled by a combination of factors including interest rate cuts and constrained housing supply.
Sydney is leading the charge, with its median house price already at $1.6 million and projected to hit $2 million by the end of 2026. This “$2 million sprint” is also set to see apartments in Sydney reach a $1 million median by the same deadline. Perth is also on a rapid trajectory toward the $1 million mark, expected to reach it within eight months, while Adelaide trails slightly behind at about 15 months away.
May data reinforces this upward trend, with the national median price jumping to $927,000, surpassing all expectations. Houses recorded a median price of $926,806, and units stood at $687,144.
A closer look at specific cities for May reveals significant month-on-month and year-on-year growth. Perth saw a 1.2% increase in house prices in May and a remarkable 10.8% over the year, reaching $922,250. Brisbane experienced a 0.7% monthly rise and a 7.2% annual increase, pushing its median to $1,038,406. Even Melbourne, despite having a higher percentage of apartments in its market, saw house prices rise 0.6% in May and 1.4% annually, hitting $1,031,964.
The apartment market is mirroring this strength. In May, Perth’s median apartment price jumped 1.2% in the month and a significant 13.1% over the year to $606,044. Brisbane’s apartments rose 0.7% monthly and 9.2% annually to $711,915. Sydney’s apartments, currently at $900,289, increased by 0.7% in May and 2.5% over the year.
The surge is attributed to two primary drivers: the Reserve Bank’s two interest rate cuts this year, making borrowing more affordable, and a sluggish pace of new home construction due to labour shortages and costly materials. This imbalance between demand and supply is pushing prices upward across the board.
The growth isn’t confined to major cities. Regional markets, particularly in Western Australia and South Australia, have seen substantial jumps of 11.5% and 10% respectively over the last year, as buyers increasingly look outside capital cities.
While the market is undeniably hot, potential shifts could cool it down. Higher unemployment rates or a significant increase in new housing builds could alleviate price pressures. However, new homes require time to enter the market, suggesting that a quick fix is unlikely.
What are your thoughts on the recent developments in the housing market? Share your insights below.
