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Regional house prices growing at faster pace
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But capital city values tipped to soar with rate cuts
House prices are expected to soar at a faster pace in capital cities compared with regional areas as interest rates are cut several more times this year.
The price of homes with a backyard have climbed by three per cent in capital cities during the past year to a new peak of $1.034million, new Cotality data showed.
But during the last financial year, regional house prices edged up by 5.5 per cent to an all-time high of $700,000.
Nonetheless, Cotality’s research director Tim Lawless said more rate cuts were more likely to buoy capital city housing markets between now and September.
‘It is looking increasingly likely that the quarterly growth trend will once again favour capital city markets over the coming months,’ he said.
‘Underneath the headline results, the combined capital cities have posted a stronger monthly growth outcome relative to the combined regional areas of Australia for a second consecutive month, following a period of outperformance across regional Australia.’
The futures market is expecting the Reserve Bank of Australia to cut interest rates from 3.85 per cent now to 3.1 per cent by the end of 2025, which would see the cash rate fall to a level last seen in February 2023.
Prime Minister Anthony Albanese’s re-elected government also has a plan to allow all first-home buyers to get into property with a small, five per cent deposit without having to pay lender’s mortgage insurance.
AMP chief economist Shane Oliver said this was likely to boost house prices.
‘More RBA rate cuts along with the ongoing housing shortage and the anticipation of more support for first home buyers are expected to drive further gains in average prices this year,’ he said.
Adelaide
was Australia’s strongest performing capital city market during the past year with median house prices soaring by 7.7 per cent to $888,869.
Perth
was in second place with prices climbing by 6.5 per cent to $855,395.
Darwin
, Australia’s most affordable capital city market, was in third place with 6.4 per cent growth taking the mid-point house price to $622,838.
Brisbane
was next with annual growth of 6.3 per cent, taking prices to $1.011million.
Hobart
, which peaked in 2022, saw its mid-point house price grow by 2.3 per cent to $718,406.
Growth has been slower in Australia’s traditionally more expensive markets.
Sydney
house prices grew by just 1.7 per cent to $1.497million.
In
Melbourne
annual growth was flat, taking prices to $947,611 in a market which peaked in 2022.
Canberra
, another weak market, saw its house prices rise by 0.5 per cent to $980,802.
Immigration levels last year slowed to 340,800, down from record high levels of 547,300 in 2023, on a net basis factoring in long-term arrivals and departures.
Dr Oliver said this would temper demand for housing as Donald Trump’s tariffs weighed down buyer sentiment.
‘Poor affordability, slowing population growth and a dampening impact on economic growth from Trump’s trade war will act as constraints,’ he said.
Despite the population slow, Dr Oliver said Australia was 300,000 homes short, with building activity unlikely to match the National Housing Accord’s annual target of 240,000 for 2024 to 2029.
‘The shortfall is likely to remain for some time to come,’ he said.
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