Dwelling costs attain new highs in February

The PropTrack Dwelling Worth Index has reported a big surge in nationwide residence costs, reaching new highs because the market responds to elevated demand and restricted provide.

“Nationwide residence costs hit a brand new report excessive in February, lifting 0.45%, the biggest month-to-month rise since October 2023,” mentioned Eleanor Creagh (pictured above), senior economist at PropTrack.

This enhance pushes the costs up by 0.82% for the yr, culminating in a 6.15% rise in comparison with the identical interval final yr, the quickest annual development since July 2022.

Elevated listings meet regular demand

2024 has seen a busier begin with extra houses coming into the market, offering consumers with extra choices. Regardless of the inflow of recent listings, demand has remained robust, buoyed by the anticipation of falling rates of interest within the latter half of 2024.

Public sale volumes and clearance charges within the first two months of 2024 have additionally constantly outperformed these in the identical interval of 2023, reflecting improved market situations.

“Housing demand has been buoyed by inhabitants development, tight rental markets, resilient labour market situations and residential fairness positive factors,” Creagh mentioned.

“In the meantime, the sharp rise in building prices and labour and supplies shortages have slowed the supply of recent builds, hampering the provision of recent housing. These components mixed have supported costs.”

Capital cities lead the expansion

Whereas all capital cities, besides Hobart (-0.12%), skilled value will increase in February, Adelaide (+0.81%), Perth (+0.56%), Sydney (+0.55%) and Brisbane (+0.54%) led the expansion, the PropTrack report confirmed.

Smaller capitals like Perth, Adelaide, and Brisbane lead, with year-over-year value jumps of 16.32%, 12.76%, and 12.16%, respectively. Up to now this yr, they continue to be prime performers, with Adelaide up 1.46%, Perth 1.22%, and Brisbane 1.17%.

“The relative affordability of those cities, inhabitants development, and really tight rental markets are supporting residence values, whereas low inventory ranges are intensifying competitors amid robust purchaser demand, leading to a sellers’ market with residence costs persevering with to rise at a quick tempo in 2024,” Creagh mentioned.

Regional markets additionally set data

Regardless of capital cities outpacing regional areas when it comes to value development to date this yr, regional markets haven’t been left behind.

Capital metropolis residence costs rose 0.88% yr to this point, hitting a brand new peak with a 0.48% enhance in February, whereas regional costs additionally reached a report after a 0.33% rise in February, up 0.65% for the yr and three.83% greater than February 2023.”

Unit market exhibits robust begin

Over the previous yr, home costs have risen by 6.29%, outstripping unit costs, which noticed a 5.49% enhance. This pattern, which started throughout the pandemic, has seen home values soar by 42.6% from pre-pandemic ranges, in comparison with a extra modest 20.5% rise in unit values. The pandemic has markedly shifted housing preferences, resulting in a big outperformance of homes over models within the majority of areas.

Nonetheless, February confirmed a change in momentum, with unit costs rising at a sooner price of 0.80% in comparison with homes at 0.38%. This brings unit value development to 1.26% yr to this point, towards home value development of 0.73%, indicating a powerful begin for the unit market in 2024.

“Housing affordability has deteriorated considerably as rates of interest have risen and the condominium market affords a relative low cost,” Creagh mentioned.

PropTrack: Outlook stays optimistic

With the speedy inhabitants development and continued tight provide, Creagh mentioned PropTrack expects residence costs to additional enhance within the coming months, particularly with the anticipation of rate of interest reductions within the second half of 2024.

“Wanting forward, the optimistic tailwinds for housing demand and a slowdown within the completion of recent houses are prone to offset the impression of decreased affordability and a slowing financial system,” she mentioned.

“In consequence, costs are anticipated to elevate additional within the months forward, significantly whereas the expectation stays that rates of interest will transfer decrease within the second half of 2024.”

Furthermore, in Brisbane, Adelaide, and Perth, consumers face extra restricted selections, intensifying competitors because of the scarce housing provide towards demand, suggesting costs might maintain rising shortly.

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