According to CoreLogic, national house prices rose at 2.8% in March, the most significant increase we’ve seen since October 1988. In March, all capital cities saw strong growth, led by Sydney with a solid 3.7% increase in dwelling values. While the weakest capital city was Adelaide, which still saw 1.5% growth. Regional Australia also continues to perform strongly, increasing in value by 2.5%. The last time house prices rose this quickly in Sydney was during the last boom in 2015, before the credit tightening policies introduced by APRA.
The strong result in March now means that both Sydney and Melbourne have fully recovered from the small COVID-induced downturn in mid-2020. Sydney prices are now back above their 2017 highs by 2.6% and have fully recovered from the -14.9% fall we saw after the last boom. Similarly, Melbourne house prices are also fully recovered and are also back at record high levels.
We are also starting to see the larger capital cities overtake the smaller capitals that had previously seen robust growth.
The first quarter also closed with strong gains across the board, with dwelling values up by 5.8% nationally.
In terms of the units vs. houses, there is still clearly stronger demand for lower-density property as houses increased by twice as much as units over the first quarter.
At the same time, it is still the upper end of the market that is producing the bulk of the gains. In March, the upper quartile of homes increased in value by 3.7% March, outpacing the lower quartile that showed a 1.6% increase.
Tight Listings Continue for Now
The substantial gains continue to come on the back of low-interest record rates and tight supply. The RBA has made it clear interests rates are likely to remain low for the next few years, while listings are also at historically low levels.
Graph of the Cash Rate Target
Total listings across the country are still at 25% below the five-year average. However, that could be slowly starting to change as new listings are on the rise as homeowners gain confidence and look to capitalize on the state of the market.