Australia's property market is running hot, and showing no signs of cooling.
Median house prices grew by approximately $18,215 in the three months ending in September, according to Cotality's September Home Value Index (HVI), the company formerly known as CoreLogic.
The report broke down price increases by month, quarter and the year, as well as median values, and found that property prices in all of Australia's capital cities have grown across all metrics. The nation's stubborn housing shortage appears to be the culprit.
Cotality's Executive Research Director, Asia-Pacific Tim Lawless said there's "a clear disconnect between demand and supply."
Across the country, home values jumped 0.8% in September, compared with August. That's on top of a 0.7% rise in August, and the sharpest monthly rise since October 2023. National values rose 2.2% in the last three months, and up 4.8% in the 12 months ending 30 September. For the September quarter, that's equal to adding an extra $18,215 onto the median dwelling value.
But the real momentum isn’t in Sydney or Melbourne, but further afield, with Darwin, Perth and Brisbane leading the charge among the capital cities.
Property values rose across all of Australia’s capital cities in September, as well as over the past quarter and year. But the sharpest gains were seen in Perth and Darwin last month, with prices up 1.6% and 1.7%, respectively. Over the quarter, Darwin led the pack with a 5.9% increase, followed by Perth at 4%. On a yearly basis, Darwin, Brisbane, and Perth topped the list: values were up 12.9%, 8.8% and 7.5%, respectively.
"In our market, in the last 12 months, we've had a bit of an influx of buyers agents from down south, and interstate investors purchasing up a lot of the cheaper stuff," Janine Ashmore, cofounder and director at Darwin-based Bliss Home Loans, told Australian Broker. "We have this, sort of, second economy going on because our rent returns are so high for investors down south. So a lot of the stock has been taken up by that."
Meanwhile, Hobart recorded the weakest growth over the past month, quarter and year, with Melbourne not far behind.
"The relative affordability dynamics on Australia’s East Coast have shifted in recent years," Harry Ottley, an economist at Commonwealth Bank (CBA), wrote in a note. "Melbourne (historically the country’s second most expensive market) is now comparatively more affordable."
By property value, Sydney still remains the most expensive market, with the median value of a dwelling more than $1.24 million, followed by Brisbane at roughly $970,000. Nationally, the median value is around $857,000.
This year’s three interest rate cuts are luring investors and upgraders back into the market. At the same time, Prime Minister Anthony Albanese’s expanded Home Guarantee Scheme — which scrapped income caps and lifted program limits — is drawing in more first-home buyers and fuelling competition against the backdrop of the nation's well-documented housing shortage.
Cotality’s report shows that advertised stock listings fell below average in all capital cities, fueling further home value increases. In the four weeks ending 28 September, listings across capitals were roughly 18% lower than the five-year average. At the same time, estimated sales activity for the September quarter exceeded the five-year average by 7.3%.
And in the cities with the fastest growth — Darwin, Perth and Brisbane — the supply of homes was down: 53%, 45% and 31%, respectively.
Meanwhile, total building approvals fell 6% in August, in seasonally-adjusted terms, to 14,744, according to the latest data from the Australian Bureau of Statistics (ABS). That's on top of a 8.2% decline in July.
Put in context, the figures reveal an even bleaker reality. They track new building approvals — not completed projects — meaning many approved developments may never come to fruition, further exacerbating Australia’s housing crisis.
In 2023, Albanese — who was re-elected to the Labor Party in May — laid out an ambitious plan to build 1.2 million new homes across the nation by 2029 by way of the National Housing Accord. The latest ABS stats suggest Australia is falling short of its goals.
"The supply crunch is well illustrated by the time dwellings are spending on the market," Harry Ottley, an economist at Commonwealth Bank (CBA), wrote in a note. "In Perth, homes are being snapped up in just 12 days on average. The Brisbane market remains highly competitive as well, at 21 days on market, while Sydney, Adelaide and Melbourne are at more normal levels (31 to 33 days), but still lower than pre-pandemic."
In Darwin, Ashmore said the lack of houses is what's driving up prices.
"[We] just need more houses to be built," she said. "That's the thing that's making it hard for first-time homebuyers. Because all that stuff is going before it even hits the market."
