By Stephen Johnson, Economics Reporter For Daily Mail Australia
05:11 01 Feb 2024, updated 09:59 01 Feb 2024
- Perth house prices up 17 per cent in a year
- No longer the cheapest state capital market
More affordable Australian cities outside of Sydney and Melbourne that attract new residents from interstate instead of overseas have seen the strongest surge in house prices.
Perth is no longer Australia’s most affordable state capital city market with its median house price jumping by 17 per cent in the year to January to $708,335, CoreLogic data released on Thursday showed.
In January alone, house prices rose by 1.6 per cent, with CoreLogic research director Tim Lawless describing Perth as a stand out for its persistently rapid rate of capital gains.
Prices in the West Australian capital are now at a record high, having earlier peaked in 2014 after the last mining boom before stagnating for years.
The middle price in Perth still buys something with a backyard less than 10km from the city centre in an inner-city suburb like East Victoria Park.
‘The western capital continues to see housing demand outweigh supply,’ Mr Lawless said.
In the coastal satellite city of Mandurah, south of Perth, property values have surged by 21.2 per cent to $596,579 during the past year.
This occurred as Brisbane‘s mid-point house price rose by 15 per cent to $888,628.
In the southern suburbs, stretching from inner-city Annerley to Stretton, home prices soared by 20.7 per cent to $1,053,461.
These provincial capital cities had the biggest house price increases even though the Reserve Bank in November raised interest rates in November for the 13th time in 18 months to a 12-year high of 4.35 per cent.
Real estate values in Australia’s state capital cities are increasing despite the most aggressive interest rates since 1989 because of rapid population growth.
Sydney, Australia’s most expensive capital city market, saw its median house price over the year rise by 12.8 per cent to $1,395,218.
This occurred after a record 518,000 net migrants, on a net basis, moved to Australia during the last financial year.
Sydney has Australia’s biggest influx of new overseas residents but also the biggest exodus to other states.
Cities with a colder climate had weaker property price increases.
Melbourne, another major recipient of new foreign arrivals, saw its mid-point house price rise by a lesser 4.3 per cent over the year to $942,750.
Hobart is now Australia’s most affordable state capital city with its median house price over the year falling by 0.5 per cent to $692,619.
Adelaide, however, had a double-digit increase with its mid-point house price rising by 10.2 per cent to $774,969.
Canberra, Australia’s second most expensive capital city market, saw its median house price rise by a more subdued 1.9 per cent annually to $968,248.
Darwin is still Australia’s cheapest capital city market with the Northern Territory capital’s median house price rising by just 0.3 per cent to $578,342.
AMP senior economist Shane Oliver said a lack of supply would see Australian house prices continue to grow in 2024, but at a slower rate.
‘Our base case remains for softer home prices this year, but the housing shortage and increasing confidence in rate cuts may keep average house price gains modestly positive,’ he said.
But with inflation last year falling to a two-year low of 4.1 per cent, Dr Oliver said Reserve Bank of Australia rate cuts in late 2024 could see prices climb again at a fast pace.
‘Expect a renewed upswing from later this year in response to lower mortgage rates,’ he said.
‘Falling inflation adds to confidence that rates will be falling from mid-year, but bear in mind that RBA communication will likely remain cautious on inflation and rates for a while yet.’