The ups and downs of property in Australia’s capital cities

Home buyers are facing quite different conditions in each capital city.

Home buyers are facing quite different conditions in each capital city. Photo: TND

Australia’s property market is stabilising after years of post-pandemic upheaval, but individual capital cities reveal diverse trends.

In Perth, Brisbane and Adelaide house prices continue to climb,  while Melbourne and Hobart have turned into surprise buyers’ markets.

Overall, property values have defied rising interest rates, cost-of-living pressures and a cooling jobs market – factors that should have restrained interest in buying, CoreLogic head of research Eliza Owen told The New Daily.

“At a national level, the supply and demand of housing is becoming a bit more balanced,” Owen said.

“Obviously, there’s much bigger variations depending on which city you’re looking at but … we’re coming into a more slow, steady, normalised cycle at the national level.”

Over the three months to May, CoreLogic found properties at the more affordable end of the market rose in value at more than twice the pace of higher-value dwellings.

Property sales have been propped up by ‘bank of mum and dad‘, although AMP Capital chief economist Shane Oliver said there are signs funds from the bank of mum and dad, along with savings buffers, are beginning to run out.

And interest rate cuts aren’t expected until the end of this year, or possibly 2025.

“We started the year off [predicting cuts by] the middle of the year … now increasingly, [they] may not come until early next year or possibly later next year,” Oliver said.

“A bunch of buyers out there who are just hanging on … some of those buffers might then start to tip over, and we have started to see a pickup in new listings in markets, particularly in Melbourne but also in Sydney, Hobart.

“So that’s a risk, that the continuing delay in interest rate [cuts] tip some home owners over the edge, resulting in an increase in listings which puts downward pressure on prices.”

Given each capital city is working off different base levels of affordability and supply, Oliver said the multi-speed property market is likely to continue.


Sydney’s dwelling values have recovered to reach the same level they were at in January 2022, but growth over the three months to May fell behind other capital cities.

The city is still home to the most expensive property market in Australia, with a median dwelling value of $1.15 million at the end of May.

But it seems the Sydney market has reached the limits of what home-buyers can afford, slowing down further growth.

“I would characterise demand for housing across Sydney as more slow and steady, constrained by affordability and high price pressures,” Owen said.

“There’s also a northeast, southwest divide, where expensive suburbs in Sydney’s north and northern beaches are flatlining a bit more.

“Whereas the fastest pockets of growth are across the inner southwest and some of the western suburbs of Sydney that are … the last pockets of relatively affordable housing.”

Despite slowing price growth, demand is still outpacing new listings.

Owen said sales volumes across Greater Sydney over the past 12 months reached 93,327, while new listings added to the market during that period were just above 80,000.


Although Melbourne has had an incredibly tight rental market over the past couple of years, Owen said an oversupply of properties for sale has affected rising prices.

Melbourne was the only capital city where dwelling values declined in the three months to May, leaving them -4 per cent below the city’s March 2022 record-high.

The median value is now $780,437.

Owen said key factors for the supply-demand imbalance include Victoria having built more dwellings over the past decade compared to other capital cities, and that Victoria lost thousands of residents to other states and territories early in the pandemic.

Owen said home owners in Melbourne’s outer suburbs appear to be at higher risk of defaulting on mortgage repayments, leading to a build-up of listings, which in turn pushes property values down.

“It is a buyers’ market. Properties are on the market for a really long time, people are offering bigger discounts on their homes to get a deal done,” she said.

“Of course, there’s still a lot of challenge for buyers in the sense that interest rates are high, it still takes a long time to service a deposit, you have to qualify for a loan.

“It’s not perfect buying conditions, but of the capital cities, it’s one of the best.”

She said falling prices would likely make Melbourne more appealing for buyers throughout 2024, especially if interest rate cuts occur – but this would in turn bolster prices up again.


Queensland saw a major upswing in interstate migration during the pandemic, pushing up Brisbane’s dwelling values more than 30 per cent in 2021.

Given the annual growth average throughout the 2010s was 1.5 per cent, this was a significant jump.

While growth slowed over the past couple of years, Brisbane’s dwelling values are still at a record high.

With a median value of $843,231 in May, the city overtook Canberra as Australia’s second-most expensive city – a position Brisbane hasn’t held since 1997.

Owen said over the past three months, value growth was strongest at the lower end of Brisbane’s property market.

The bottom 25 per cent of home values rose 5 per cent, while the quarterly growth rate for the high end of the market was 3.2 per cent.

But Oliver warned prices can’t keep going up forever.

With the median Brisbane home already more expensive than Melbourne’s, he said buyers will increasingly look elsewhere as prices rise further, which will eventually put downward pressure on price growth.


Previously the hidden affordable gem of the Australian property market, Adelaide has found itself firmly in the spotlight wth home-buyers.

Demand is outstripping supply, with almost 26,000 sales over the past year versus about 20,000 new listings in the same period.

Owen said this supply imbalance is pushing the city’s property values up towards Melbourne levels, with Adelaide having seen the second-highest growth in dwelling values in the three months to May.

Adelaide’s prices are at a record high, with the current median dwelling value at $757,448 – about $23,000 less than Melbourne’s median value.

Pre-pandemic, Adelaide’s median dwelling value sat at about $440,000.

“In Adelaide, the listings volumes are down around 40 per cent compared to their historic five-year average,” Owen said.

“Before [the pandemic], Adelaide was a very slow and steady market.

“So I think this is a real period of catch up, and value that’s been unleashed through more remote work, more interstate movement, and people trying to find good value amid high interest rates.”


Western Australia’s capital is proving to be the sleeper-hit of Australia’s property market.

Perth recorded the highest dwelling value growth out of the capital cities both in the past 12 months (22 per cent) and in the three months to May (6.1 per cent).

The city’s prices are at a record high, with a median value of $736,649.

Oliver pinned the rapid growth on increased interstate migration, a significant turnaround in fortunes for Perth where home values are not only rising, but are rising at a continuously faster pace with little sign of slowing down.

“Throughout much of the 2010s, interstate movements to WA were negative because the state was going through a big fallout from a mining bust, essentially,” Owen said.

“So that’s all tightened up … net interstate migration is positive, net overseas migration is at record-highs, and the city’s essentially been hit with a massive surge in demand against a relatively constrained construction sector and a slow trickle of new supply.”

“Over the past year, there were 47,000 new listings added to the market across Perth … in a period where 53,000 sales took place.”

The rapid growth of Perth property prices came from a lower base than Melbourne and Sydney, meaning dwellings are still relatively affordable for local incomes, she said.


On the surface, Hobart’s property market may appear to be performing terribly.

After all, it was the only capital city where dwelling values fell (-0.1 per cent) over the 12 months to May.

The current median dwelling value is $655,170; while prices are now -11.5 per cent below Hobart’s March 2022 record high, but  they are still up 85 per cent compared to a decade ago.

That is the highest value growth rate of any capital city over the past 10 years.

The recent drop in growth due to interest rate hikes simply represents the normalisation of Hobart’s property values.

“There’s not a big exodus from Tasmania necessarily, but less people are choosing to settle there because it probably was overpriced relative to how much interest rates were going up,” Owen said.

“Perth has had massive growth off a low base, [while] Hobart has had a substantial correction off a high base.

“[Hobart is] definitely a buyers’ market, but it’s still seen a vast amount of uplift in value over a longer period of time.”


While property markets in Perth are experiencing new highs and are weakening in Hobart, Darwin is in the middle.

Darwin’s values declined -0.3 per cent in May, leaving the city’s dwelling values -5.3 per cent below its May 2014 record-high.

But in the 12 months prior to May this year, values increased 3.5 per cent.

Oliver said Darwin’s property market used to correlate with Perth’s during the previous mining boom, but that connection has broken down.

Perth is now booming, while Darwin’s market is growing at a more sedate pace.

“I suspect that Darwin just isn’t quite seeing the benefits of the mining boom that WA is, and it’s not seeing the same degree of interstate migration,” Oliver said.

Owen agreed Darwin’s property market doesn’t appear to be swayed by the same factors as fellow capitals; the city was not subjected to the same surges in demand during Covid as Brisbane experienced.

Darwin’s current median dwelling value is the lowest of the capital cities, at $502,120.


Despite regular increases, the ACT capital slid to third-place in Australian capital cities’ median dwelling values in May with $840,100.

Similar to Hobart, this doesn’t indicate a market freefall; Canberra is just coming off a decade of highs which brought dwelling values up about 70 per cent.

Oliver said the city has hit its affordability ceiling, and with a rental vacancy rate above the national average, renters are feeling less pressure to become home owners.

A combination of interest rate rises and supply shock thanks to the completion of new units over the past few years has also contributed to Canberra transforming into more of a buyers’ market, Owen said.

Canberra dwelling values are now -5.8 per cent below their May 2022 record high; prices are still rising, but more softly.

“It looks to be stabilising now, having had a substantial correction in response to rate rises,” Owen said.

Topics: Property
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