Australian home prices experienced another increase in August, marking the seventh consecutive month of growth, according to data from Cotality (formerly known as CoreLogic). The pace of increase accelerated slightly to 0.7% month-on-month, the fastest rate since May of the previous year. Capital city price growth also rose to 0.8% month-on-month. Cotality is a leading provider of property data, analytics, and related services in Australia and New Zealand. They deliver insights and solutions to a wide range of clients including banks, government agencies, and real estate professionals.
The upswing, which began in February when the Reserve Bank of Australia (RBA) first started cutting interest rates, has been further supported by subsequent rate cuts in May and August. Expectations of additional cuts, along with improving real wages, consumer sentiment, and an ongoing property shortage, have also contributed to the price increases. Rental growth is also showing signs of picking up, with average monthly growth rising to 0.5% and the annual change accelerating to 4.1% year-on-year.
All capital cities, with the exception of Hobart, saw home prices rise in August. Brisbane, Perth, and Adelaide continued to experience accelerating growth, while Melbourne remained a relative laggard. Sydney recorded a 0.8% monthly increase, reaching a new high with a median value of $1,224,341. Darwin experienced the highest annual growth at 10.2%, reaching a new high with a median value of $553,131.
Looking ahead, further gradual RBA rate cuts, real wages growth, the persistent housing shortage, and increased government support for first-home buyers are expected to drive further gains in average prices this year. However, poor affordability, interest rates remaining relatively high compared to the 2021 low, and slowing population growth are expected to act as constraints. Current projections estimate home prices to rise around 7% this year, potentially picking up to around 8-10% next year.
