Australian house prices are rising at their fastest rate in nearly four years, as buyers rush to auctions and owners put off selling amid expectations for a further upswing.
Capital city house values have sustained their longest continuous stretch of growth in a decade with a median increase of $35,000 in the three months to September, new data from Domain shows.
The median price rose $26,000 the previous quarter. Two in three Australians expect prices will rise further in the coming year, NAB research on Wednesday found, with analysts forecasting increases between $50,000 and $100,000.
Brisbane has overtaken Canberra as the second-most expensive house market, after Sydney, with median prices rising nearly $40,000 to hit $1.1m, over the three months to September.
Three interest rate cuts and the prospect of further price hikes in coming months have boosted buyer interest and generated sustained upswings – the longest ever for apartments, and longest in 21 years for houses.
Lauren Jones, a buyer’s agent in Brisbane, said buyers rushed in before October’s expansion of the federal government’s first home guarantee on 5% deposit purchases, which lifted the city’s price caps from $750,000 to $1m.
“From the moment that they announced that the house market went crazy – we were getting calls every other day for people wanting to get in before 1 October,” she said.
Prices have flown even higher since then, Jones said, frustrating hopeful buyers. One apartment sold for $70,000 more than an identical unit in the same complex, which sold just before the expanded scheme.
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“They’re seeing that they’ll miss out on a property, and then the next one that comes along in a few weeks’ time, they’re having to pay an extra $10-, $20- or $30,000 for it,” she said.
Rising prices, though, are encouraging those considering selling to hold on longer, which has seen listings fall to their lowest level since 2010, SQM data indicates.
“People know that the market’s rising and, if they don’t have to sell, they’re waiting to just get more capital gains on their property before selling,” Jones said.
Perth, previously one of the hottest housing markets in the country, recorded slower price growth in the September quarter. Homebuyers have increasingly swapped to more affordable units, which outpaced house price growth of $15,000 to rise by $21,000.
Mark Whiteman, the chief executive of the state branch of Ray White real estate, said bidders were still coming to auctions in droves but prices were now out of reach for some.
“For many of those that aren’t raising their paddle [at auction], it isn’t by any other reason than the price may have moved past them,” he said.
Sydney and Melbourne also recorded accelerations in growth but the country’s biggest city well outpaced the second biggest. Sydney houses grew nearly $60,000 more expensive from July to September, while median prices in Melbourne rose by $23,000.
That was still the city’s fastest house price growth in nearly four years and followed a four-year high for apartment price growth in June. Nicola Powell, the chief economist at Domain, said Melbourne’s relative affordability could be limited.
“We are in the acceleration mode and what I suspect we are going to see is a speed ranking change,” she said.
Melbourne’s slower population growth, reduced breaks for investors and stronger housing construction than other cities had restrained prices, Powell said.
Victoria built 55,000 new homes in the year to June, or about 90% of its annualised target under the national housing accord, data released last week showed.
Queensland built less than 70% of its annualised target, as construction workers begin to move from housing to Olympics infrastructure, while New South Wales built just over 50%.
The Reserve Bank governor, Michele Bullock, earlier in October reiterated her warnings that government measures to boost supply may not slow down price growth until at least 2027.
The RBA will meet on Melbourne Cup day to consider handing down a fourth interest rate cut for 2025, which would further boost home values. Financial markets are betting on a 75% chance of a rate cut.
