Brisbane and Adelaide seem unfazed by the overall market cooldown, as price gains in these two cities remained strong.
Domain’s latest quarterly report showed that these two cities hit new records in both house and unit prices.
In Brisbane, house prices increased by 32.1% annually to reach $831,346 while unit prices went up by 9.3% to $437,034.
Domain chief of research and economics Dr Nicola Powell said Brisbane is the fastest-growing capital city market in Australia over the past year.
“Brisbane has long been waiting for this property boom, showcasing the steepest upswing in 18 years for houses and 14 years for units,” she said.
Dr Powell said Brisbane and Queensland will likely continue to experience a property boom, especially given the strongest annual population the state recorded due to heightened interstate migration.
“This interest will be supercharged by the opening of international borders, eased social distancing rules, and high vaccination rates, particularly from young families seeking better affordability, lifestyle, work-life balance, and the expanding jobs market on offer in Queensland,” she said.
“Also, the 2032 Olympic games will underpin strong infrastructure, population, and economic growth over the next decade.”
Meanwhile, Adelaide’s prices increased by 28.1% to $750,084 for houses and 9.8% to $376,977 for units.
However, Dr Powell said the upswing in Adelaide has lost steam, which could indicate affordability constraints affecting potential buyers.
“House prices have grown three times faster over the past year in comparison to units that have created a record price gap, with houses edging close to double the price of a unit,” she said.
“The rapid price escalation will prove to be a financial hurdle and challenge for entry buyers as well as for people looking to upgrade from a unit to a house, particularly against a backdrop of low wages growth and the increased costs of living.”
While Adelaide remains a highly competitive market, it appears supply is slowly improving, as the total supply of homes for sale is 16% above the multi-year low.
“Rapidly rising house prices and the lure of a sellers’ market are enticing homeowners,” Dr Powell said.
“As the supply-demand dynamics continue to rebalance, it should help to ease the fiercely competitive nature that has impacted buyers throughout this price upswing.”
Overall market cooldown
Domain’s quarterly report shows the property boom has already slowed down during the first three months of the year, with the median house price growth rate dropping to 0.6% while the median unit price declining by 1%.
“These latest quarterly statistics could ease some of the pressure particularly for first home buyers, with annual growth being at a 12-month low,” Dr Powell said.
“While each city’s figures vary, we’re seeing Australia settle into a ‘new normal’, including increased interstate movements, ease of restrictions and return of international workers, which is prompting shifts in the property market.”
Over the quarter, house price growth in Melbourne and Canberra decline, while Sydney reported a flatlining growth after an extreme property boom over the previous years.
“When paired with increasing supply, these current dynamics will help ease competition between buyers,” Dr Powell said.
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