Brisbane and Adelaide continued to dominate other capital cities in terms of price growth in January.
CoreLogic’s latest Hedonic Home Value Index report showed that over the month of January, the two were the only state capitals that posted monthly gains of more than 2%.
CoreLogic research director Tim Lawless said there are several factors that separate the two cities from their peers, allowing them to consistently report stronger growth rates over the previous months.
“In Brisbane and Adelaide, housing affordability is less challenging, advertised stock levels remain remarkably low and demographic trends continue to support housing demand, especially across South East Queensland,” Mr Lawless said.
Highest annual growth achieved
Five of the eight capital cities posted higher growth rates in January than in December, including Melbourne.
The Victorian capital recovered from the monthly decline it recorded in December, with its median price rising by 0.2% in January.
Mr Lawless said housing stock is typically “thinly traded” during January and monitoring this trend would indicate how 2022 would shape up.
“The early indication is that housing markets are starting 2022 with a similar trend to what we saw through late last year — values are still broadly rising, but nowhere near as fast as they were in early 2021,” he said.
Mr Lawless said the softening of the booming housing market has been influenced by less government stimulus, heightening concerns on affordability, rising fixed rates, and the surge in new listings over the last quarter of 2021.
On an annual basis, national home values reached a new cyclical high with a gain of 22.4%, the highest since June 1989.
This means that a typical Australian home is now worth around $131,000 more than it was year ago.
Five state capitals registered annual gains of more than 20%, with Brisbane posting the most significant median growth rate of 29.2%.
Regional markets still trump state capitals
Looking outside capital cities, regional markets remained superior in terms of price growth.
Combined regional figures showed a 1.8% monthly and 26.1% annual gains in median prices, higher than the 0.8% monthly and 21.3% annual growth across combined capital cities.
Mr Lawless said the regional markets of Queensland and South Australia led the growth; however, the favourable conditions were apparent across most regional areas.
“Regional Australia’s outperformance relative to the capitals has been a feature through most of this cycle to date, driven by a combination of higher demand and low levels of advertised supply,” he said.
Million-dollar house markets
Three of the eight capital cities now have a median house value of above $1 million.
Melbourne’s median house price reached $1 million for the first time in January, while Canberra maintained its $1 million median house price for the second month in a row.
Meanwhile, houses in Sydney now have a median price of around $1.39 million.
However, Mr Lawless noted the slowing conditions in Sydney and Melbourne, which could potentially impact where prices go in these cities over the coming months.
“The slowing trend in Sydney and Melbourne can at least partially be explained by a larger deposit hurdle caused by higher housing prices alongside low-income growth, along with higher advertised inventory levels and weaker demographic trends,” he said.
Photo by @stevenwei on Unsplash.