Home Prices Rise For A Third Consecutive Month In March
The rebound in house prices has continued for another month, with values across the country rising 0.13% according to the PropTrack Home Price Index.
After higher interest rates weighed on values during the second half of 2022, prices have now rebounded 0.43% since the start of the year.
Prices were higher across most capital cities in March, with values increasing in Sydney (+0.27%), Perth (+0.24%) and Melbourne (+0.12%). Adelaide (+0.10%) also saw prices rise, while values in Canberra increased slightly after a flat February (+0.03%).
However, Hobart (-0.43%), Brisbane (-0.06%) and Darwin (-0.10%) all experienced moderate declines.
While home prices have fallen from their peak in most markets, prices nationally are still 29.9% above their pre-pandemic levels.
PropTrack, Senior Economist, Eleanor Creagh said some of the factors that have been driving prices up have been the surge in immigration and also the fact that stock levels remain tight.
She also said while higher borrowing costs had been weighing on demand, with inflation slowing there is a chance we are reaching the end of the current tightening cycle.
“There is evidence that the substantial tightening pushed through in a short period is weighing on households,” Ms Creagh said.
“Despite the latest monthly inflation read providing further evidence inflation may have peaked in December and indicating cost pressures are easing as the tightening already pushed through is taking effect, inflation remains elevated and is well above the Reserve Bank’s 2-3% target range.
“Further, it takes time for higher interest rates to fully impact household cash flows. In this tightening cycle, with so many borrowers having taken advantage of record low fixed rate mortgages throughout the Covid period yet to feel the full impact of rate rises, this is especially the case.
“As such, it is expected that consumer spending will slow sharply over the coming months as the lagged impact of rate rises already delivered takes effect.”
Ms Creagh said that when the official cash rate tops out, it could see buyers return to the market.
Economist, Leith van Onselen said the rise in home prices has come as a surprise.
“The remarkable thing about this recovery is that it has arrived despite a 0.25% interest rate hike from the Reserve Bank in early February, and another 0.25% rise in early March,” Mr van Onselen said.
“These interest rate hikes have further reduced borrowing capacity, and should logically have pushed house prices lower.
“Yet, the lack of listings, soaring rents and record immigration have outweighed these rate rises, resulting in the current rebound.
“Whether we have truly passed the bottom of the house price cycle remains to be seen and we will only know in hindsight. But it is certainly looking like it.”