Australian residential property market is on the up in capital cities
The local landscape is still hard to predict as interest rate rises loom
2 min
The property downturn in Australia may have turned a corner, information from data analytics company Neoval suggests, with capital city prices increasing by 1.9 percent since December.
Ray White chief economist Nerida Conisbee said while it’s unlikely increases will happen at the same pace that they did during the pandemic, the market appears to have stabilised, with Sydney leading the way. Neoval data showed Sydney prices have increased 2.7 percent, followed by Canberra and Melbourne, which both saw a 2.0 percent rise. Hobart and Brisbane prices went up by 1.8 percent, while Adelaide (1.4 percent), Perth (1.3 percent) and Darwin (1.1 percent) rounded out the capitals.
Ms Conisbee noted that the increases reflected different circumstances in each capital, making it harder to predict price movements going forward. While a resources boom in Perth and less sensitivity to interest rate rises in areas like Darwin may have contributed to higher prices, flooding in Brisbane last year will continue to put pressure on accessibility to trades in that city as homeowners try to rebuild.
The impact of further interest rate rises and fixed rate home loans soon ending for a substantial number of borrowers across the country was also yet to be felt. The RBA is scheduled to meet tomorrow, with most experts predicting a further rate rise.
“If house prices do now show a continual increase from this point forward it highlights the complexity of property markets,” Ms Conisbee said. “House prices are very sensitive to interest rates and there is almost complete consensus that these will continue to increase for a bit longer.
“We also have a lot of loans coming off fixed rates and this is likely to make some investment properties less financially attractive. It will also mean that holding a vacant property such as a holiday home, less desirable. It is likely more properties will come to market.”
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In signs that confidence is returning to the Australian property market, the combined capitals recorded their highest preliminary clearance rates since April last year, CoreLogic reports.
More than 2,290 homes went to market across capital cities last weekend with early data revealing a 71 percent clearance rate. This compares with a revised clearance rate of 64.2 percent last week. It marks the second busiest auction week to date this year.
Melbourne led the way, with 1,122 homes taken to auction. Of the 916 results collected so far, 73.5 percent were successful. It was a similar story in Sydney, with 791 homes to go under the hammer. Preliminary results indicate a clearance rate of 71.5 percent.
The smaller capitals including Brisbane, Adelaide and Canberra all experienced higher clearance rates week on week, with Adelaide out in front at 78.6 percent. It was a less spectacular result in Canberra, with a 59 percent clearance rate and in Brisbane at 56 percent.
In Perth, just three of the 13 auctions tallied so far were successful.
