‘Momentum is building’: House price growth accelerates in Australia’s biggest cities – realestate.com.au

The housing market rebound is strengthening, with price growth accelerating and home values ​​breaking records.

According to the PropTrack Home Price Index, the pace of home price growth accelerated last month due to interest rate cuts and incentives for first-time buyers.

The national median value grew 0.6% in October, which was the fastest monthly price growth rate recorded so far this year.

Values ​​are now 7.5% higher than a year ago – year-on-year price growth we haven’t seen since May last year.

Prices rose in every capital and region in October and are at record highs in all capitals except Hobart and Canberra.

The market’s stronger growth comes after three rate cuts from the RBA this year in February, May and August, which saw typical interest rates on variable mortgages fall by a total of 75 basis points.

As a result, buyers who take out a loan to purchase a home now have more money to spend, while the lower interest rate improves borrowing capacity.

The average house price in Brisbane has risen 12.6% in the past year, after rising a further 0.9% in October. This new five-bedroom home in Wavell Heights in Brisbane’s north sold last month for $2.75 million. Image: realestate.com.au/sold

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These rate cuts have coincided with a change in market sentiment, with more buyers now expecting prices to rise further.

PropTrack senior economist Eleanor Creagh said increased competition in the housing market has pushed prices to record levels.

“The increased borrowing capacity, lower mortgage rates and improving sentiment mean renewed competition,” she said.

“Market momentum is increasing amid renewed buyer confidence and improved sentiment, supported by earlier rate cuts.”

The recent expansion of the Home Guarantee Scheme, which allows first home buyers to buy with a smaller deposit, is expected to further boost demand, Creagh said.

“The market appears poised for further gains in the spring and summer,” she said.

“With limited inventory in the marketplace and new supply challenged, conditions remain skewed toward sellers.”

How house prices changed in Australia in October

The data shows that the smaller capital cities continue to top the charts for price growth, led by Darwin, where average home values ​​have risen by 12.8% in the past year.

Brisbane (12.6%), Perth (11.8%) and Adelaide (10.3%) were not far behind, with Adelaide recording a 1.2% price increase in October alone – the fastest monthly growth of any capital city.

These three cities have been the strongest housing markets in recent years, partly due to the high interest rate environment and tough housing affordability, pushing more buyers and investors to cities and regions where real estate has historically been cheaper.

Big cities are gaining strength

But the situation appears to be changing as previously lagging markets catch up.

“The growth pattern is changing,” Creagh said. “Over the past year, Darwin, Hobart, Melbourne and Sydney have seen the fastest acceleration in annual gains as previously softer markets regain strength.”

Sydney house prices rose 0.6% in October and 6.4% last year – the fastest annual growth rate in about a year and a half.

Values ​​in the port city are at an all-time high, with a typical home now worth $1.622 million and a unit valued at $874,000.

Prices in Sydney are rising again after a period of moderate growth. Photo: Getty

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Sydney’s regions are among the fastest quarterly price increases in the country, with prices rising by around 4% in the eastern suburbs and Parramatta, and 3.5% domestically, in the past three months alone.

Meanwhile, prices in Melbourne have entered uncharted territory, with the city’s average value eclipsing the previous high set in early 2022, before interest rate rises sparked a prolonged downturn.

Prices rose 4.6% from a year ago – an annual growth rate not seen in more than three years.

Melbourne’s price growth is catching up after a long period of lagging other capital cities, with the average value being surpassed by Brisbane, Perth and Adelaide over the past year and a half.

Melbourne’s northwest has recorded the city’s strongest price growth over the past year. This three-bedroom Glenroy home sold last month for $720,000. Image: realestate.com.au/sold

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Like Darwin, Melbourne has been the target this year of interstate investors buying into the decline in value that has occurred since interest rates were first raised in early 2022.

Prices have risen fastest in the North West, up 6% in the past year, with the fastest price increases happening in the suburbs where homes tend to be more affordable.

Prices rise in sync

Ms Creagh said lower borrowing costs and increased competition for fewer homes had led to prices rising across the board.

“The current rebound is a synchronized expansion, supported by lower rates and limited supply, with broad price appreciation across the country.”

Although last week’s higher-than-expected inflation figures left expectations of a rate cut in the Melbourne Cup cold, it looks like the housing market will still be in full swing for the rest of the year.