After a period of uncertainty and declining values, the housing market has made a stunning comeback. House prices have surged to new all-time highs, completely reversing the losses experienced during the recent downturn.
This dramatic rebound has taken many industry experts and homebuyers by surprise, signaling a renewed confidence in the real estate sector. Driven by low inventory, strong demand, and stabilizing interest rates, this price surge marks a critical turning point for the market. For homeowners, it’s a welcome recovery.
For buyers, it’s a sign that competition — and costs — are heating up again. In this article, we’ll explore what’s fueling the rebound, how different regions are responding, and what this means for buyers, sellers, and investors moving forward.
Read More: House Prices Hit New Highs, Erasing Recent Downturn Losses
National Housing Recovery in Full Swing
After a challenging period that saw prices fall for three consecutive quarters in 2022, the market has clawed its way back. Both house and unit prices have steadily increased, driven by strong buyer competition, limited supply, and ongoing demand.Nicola Powell, Domain’s Chief of Research and Economics, noted that early 2023 saw a pullback in new listings. However, as buyer activity intensified by mid-year, it reignited momentum across the market.“New listings have risen, but demand is still there,” Dr Powell said. “We’re still seeing prices rise and they haven’t risen enough to actually stabilise price.”
Key Drivers Behind the Rebound
Several factors are contributing to the market’s renewed strength:
- Tight supply and hesitant sellers
- Strong population growth through migration
- A competitive rental market
- Affordability concerns tempered by rising demand
While affordability, rising construction costs, and supply constraints pose challenges, population growth and rental pressures continue to buoy prices across the board.
Brisbane: Fastest Unit Price Growth in the Country
- Brisbane’s housing market has posted its strongest annual gains since September 2022.
- Median house prices: $888,285
- Total value recovered: $47,000 lost during the 2022 downturn
- Median unit prices: $524,202, up 14.2% — the city’s fastest increase in 16 years
- Brisbane stands out as a leader in unit price acceleration, continuing to break price records well into 2024.
Sydney: Consistent Growth and a Market Leader Once Again
Sydney has posted its fourth consecutive quarter of growth for both houses and units — a performance not seen since 2021.
- Median house price $795,994
- Value recovered: $147,000
- Unit prices: $795,994
With the pace of recovery holding steady, Sydney is expected to surpass the $1.6 million mark in the first quarter of 2024.
Melbourne: Gradual but Positive Movement
Melbourne’s market recovery is unfolding at a more measured pace:
- Median house price: $1,047,273, up slightly
- Unit prices: $579,506, experiencing three consecutive quarters of growth
- This sustained period of growth represents the strongest performance since late 2019, signaling increasing stability in the city’s unit sector.
Adelaide and Perth: Record-Setting Performance
Both cities continue to show robust growth in median prices for both houses and units.
- Adelaide and Perth are benefiting from tight rental markets
- Perth, in particular, is seeing spillover interest from Hobart, contributing to continued price strength
Despite recent positive movement, the city’s property market remains sensitive to external pressures.
Darwin and Canberra: Outliers in the December Quarter
Australia’s two territories broke from the national trend:
- Darwin experienced declines in both house and unit prices
- Canberra showed unit price growth but fell in house values
Darwin remains the most affordable city for both housing types, offering potential value for price-sensitive buyers.
Looking Ahead: Modest Growth with Constraints
Dr Powell forecasts that property prices will continue to rise through 2024, though the pace will likely slow due to affordability constraints.“This is not going to be a boom-time scenario,” she said. However, upcoming stage three tax cuts and potential interest rate cuts may offer further support to market activity.
Frequently Asked Questions (FAQs)
Why have Australian house prices hit record highs again?
Australian house prices have rebounded due to a combination of low property listings, strong buyer demand, tight rental markets, and population growth through migration. These factors have outweighed the impact of affordability challenges and high construction costs.
Which Australian city experienced the fastest unit price growth?
Brisbane recorded the fastest unit price growth among all capital cities, with prices rising by 14.2%, marking the strongest increase in about 16 years.
Has Sydney fully recovered from the 2022 housing downturn?
Yes. Sydney’s median house price has reached $1,595,310, fully recovering the $147,000 lost during the 2022 downturn. Unit prices have also rebounded, reaching $795,994.
Are prices expected to keep rising in 2024?
Yes, prices are forecast to rise further in 2024. However, the growth will likely be moderated by affordability issues. Potential tax cuts and a reduction in interest rates could support further price growth.
What happened to housing prices in Darwin and Canberra?
Unlike other cities, Darwin and Canberra experienced declines in house prices in the December quarter. Darwin remains the most affordable city to buy a house or unit in Australia.
Conclusion
Australia’s housing market has made a robust and confident comeback, fully recovering from the 2022 downturn and setting new benchmarks across major cities. Record-breaking price growth in cities like Sydney, Brisbane, and Perth underscores the strength of buyer demand, supported by tight rental conditions and a surge in population through migration.
