Perth, Adelaide property now pricier than Melbourne
In the four decades since the property price series has been running, Adelaide has overtaken Melbourne for the first time, while Perth also raced past the Victorian capital's median dwelling value.
Melbourne property is parked in the slow lane and has now been overtaken by the Grand Prix-paced property price growth that has been underway for a couple of years in Perth and Adelaide.
With Canberra and Brisbane having earlier sped past Melbourne’s median property price, the Victorian capital is now the third lowest in the country among capital city markets.
It now only sits above fellow contracting markets, Darwin and Hobart.
The release Monday (2 September) of CoreLogic’s Home Value Index (HVI) for August has again highlighted the turbocharged power of Perth’s property market, which maintained its 2.0 per cent uplift in dwelling values from last month and shows no sign of running out of fuel.
The Perth median house and unit price is now $785,250, behind but catching up with Adelaide’s $790,800 and ahead of the $776,044 in Melbourne. In August, Adelaide and Perth saw increases in the median dwelling value of $13,600 and $15,300 respectively, against a $3,100 fall in the Melbourne median.
In a telling mark of how underperforming the Melbourne property market has been, CoreLogic’s 40-year median dwelling value series has never before recorded an Adelaide median price above Melbourne’s.
Nationally, the HVI showed property prices had risen by 0.5 per cent in capital cities and regional markets alike. It was the 19th consecutive month of increases, although the pace of growth is easing.
Powering the property market are the more affordable suburbs around the nation.
The lower quartile of the combined capital city market, which makes up the most affordable 25 per cent of dwellings, rose 2.7 per cent in the three months to August, compared to a 0.3 per cent lift across the upper quartile.
CoreLogic’s Head of Research, Eliza Owen, said that while seasonality may have contributed to weaker value growth through winter, affordability constraints are a key factor behind the broader slowdown.
“The seasonally adjusted HVI had a stronger result through the three months to August, at 1.7 per cent but this is still down from the 3.3 per cent lift seen in the winter of 2023,” she said.
PropTrack data had the national rate of dwelling price increases at a lower 0.25 per cent but on a similar slowing trajectory.
Eleanor Creagh, PropTrack’s Senior Economist, said price momentum is weaker in Melbourne as buyers have consistently enjoyed more choice relative to other markets.
“At the same time, construction rates relative to population growth in Victoria have been somewhat balanced compared to other parts of the country.”
Low stock levels would see pressure on Perth and Adelaide property price sustained.
“Tight supply amid strong buyer demand has seen competitive conditions fuelling strong price growth in Perth, where sellers are entering the spring selling season with a strong advantage.
“Though the number of properties hitting the market has increased, total stock on market remains well below the prior five-year average as new listings are quickly absorbed.”
Ms Creagh painted a similar picture in Adelaide.
“Low stock levels are intensifying competition, and sellers there are also entering the spring selling season with the upper hand.
“Although the number of properties hitting the market has increased, total stock on market remains well below the prior five-year average as new listings are quickly absorbed amidst strong buyer demand.
“The comparative affordability of the city’s homes has also contributed to persistent strong growth.”
Supply uptick looming?
Everyone from governments to developers, renters to charities has been screaming out for an increase in housing supply to address the housing and rental crisis that gripped the nation.
Constantly rising property prices have had serious social implications.
While nowhere near adequate yet, there are signs that the worst for house approvals looks to have passed.
The latest ABS Building Approval release on Monday showed national total dwelling approvals in seasonally adjusted terms jumped 10.4 per cent to 14,797 in July.
Maree Kilroy, Senior Economist for Oxford Economics Australia, said that while development enquiries, land sales, and construction finance leads may have flattened, they are all broadly up on a year ago.
“We forecast that new house construction will lift 6 per cent year-on-year nationally in FY2025.”
Off a weak June result, private attached dwellings rebounded 32.1 per cent to a still poor 5,234 approvals.
“This jump is not however a concrete indication of a turning point for apartment construction; outside of some niche markets, the run up in interest rates continues to weigh on apartment presales,” Ms Kilroy said.
“For build-to-sell developers, delays, higher debt costs, and increased build tender prices are causing feasibilities to not stack up.
“This difficulty is showing through in a subdued volume of project launches, meanwhile for build-to-rent, financing has become more difficult with policy uncertainty holding back some institutional investors.
“We expect attached dwellings will take longer to join the upturn.”
