Summary: Australian capital city property markets displayed varied performance in early 2024, with Perth recording the strongest growth while Sydney and Melbourne experienced declines. Multiple factors, including limited housing supply, high construction costs, and interest rate increases, were cited as influencing these divergent trends. Projections indicate the divergence may continue into 2026.
Current Market Performance
According to property data firm Cotality, dwelling values in Perth increased by 24.3% in the 12 months to March 2024, the highest growth among all Australian capital cities. In the first quarter of 2024, Perth recorded a 7.3% increase in dwelling values.
Properties in Perth sold in an average of nine days during the March quarter, compared to a national average of 30 days. The median house price in Perth reached $1.06 million in April 2024.
"Properties in Perth sold in an average of nine days — compared to a national average of 30 days."
Other capital cities also recorded annual dwelling value increases in the year to March 2024:
- Brisbane: 5.1%
- Adelaide: 3.6%
- Darwin: 3.4%
In contrast, Sydney and Melbourne saw dwelling values decline in the three months to April 2024. Sydney's values fell by 0.2%, and Melbourne's fell by 0.6%.
Median house prices in April 2024 were reported as:
- Sydney: $1.6 million
- Melbourne: $980,000
- Brisbane: $1.2 million
- Perth: $1.06 million
Factors Influencing Markets
Supply and Construction
Limited housing supply and high construction costs were cited as factors driving price growth in some markets. The Urban Development Institute of Australia's March 2024 report forecast a national shortfall of 380,000 new dwellings by 2030 and an 11% drop in production in 2026.
The Master Builders Association reported a 10% increase in building material delivery costs, partly attributed to rising fuel costs.
Economic Factors
The Reserve Bank of Australia raised the official cash rate from 3.85% to 4.10% in March 2024.
Jarrod Mahon, managing director of Investors Edge Real Estate, stated that demand in Perth is high, with properties selling quickly and often above asking price. He reported an average sale price $99,000 above asking in the March quarter. He attributed growth to a lack of existing housing stock and rising construction costs.
"We are seeing an average sale price $99,000 above asking in Perth's March quarter," said Jarrod Mahon.
Gerard Burg, head of research at Cotality, stated that all capital cities are "starting to lose some momentum" due to factors including interest rate increases and economic uncertainty. He noted that price falls in Sydney and Melbourne indicate some buyers have reached their purchasing capacity.
Regional Trends
According to Cotality, regional areas recorded the largest price rises in the March quarter of 2024 and in the 12 months to April. Gerard Burg attributed this to affordability constraints in capital cities and migration trends toward regional areas.
The national rental vacancy rate was 1.6% in March 2024, well below the decade average of 2.5%.
Market Projections
ANZ predicted median house prices will increase in most capital cities by the end of 2026. Prices in Perth, Darwin, Brisbane, Adelaide, and Hobart are expected to outpace annualised wage growth.
Specific projections include:
- Perth property values are projected to increase by a further 12.3% by January 2026.
- Sydney property values are projected to fall by 0.7%.
- Melbourne property values are projected to fall by 1.7%.
Statements on Risks
Sally Tindall, data insights director for Canstar, noted that Australian property markets present increasing risks as some borrowers borrow at their financial capacity. She stated that borrowing to the limit could leave households overexposed if economic circumstances change.
"Borrowing to the limit could leave households overexposed if economic circumstances change," warned Sally Tindall.