Australia's capital cities – rising or declining?

Over the June quarter, Australia’s median house price rose by 1.7 per cent to a record high of $818,416, which is 10.1 per cent higher than this time last year. According to Domain, this was the lowest quarterly increase since March 2016.

Median unit prices also rose by 1.7 per cent over the quarter to $573,064, making it the fifth quarter of growth for units in a row.

“The national median house price continues to rise, but it is evident that the rate of national price growth is slowing down,” said Domain chief economist Dr Andrew Wilson.

“Most capital city housing markets – in particular, Hobart and Darwin – have recorded strong growth over the winter months, despite the driving force of last year’s interest rate cuts starting to wane.” 

Hobart came out on top as the capital city with the highest gross rental yields for houses at 5.38 per cent, and Canberra for unit yields at 5.71 per cent. Meanwhile, Sydney was at the other end of the scale with the lowest yields for both houses and units at 3.23 per cent and 3.94 per cent respectively.

Home vacancy rates stayed low for capital cities over the quarter, with the exceptions of Perth, Darwin and Brisbane.

“While rental price growth for houses eased in most capital cities over the June quarter – providing tenants with some much-needed relief – growth rates are still rising annually,” Dr Wilson said.

“The exceptions are the resource capitals of Darwin, Perth and Brisbane, where annual rents continue to decline.”

“As we’ve seen in previous quarters, an increasing number of Australians are recognising the benefits of moving outside of Australia’s capital cities, driving significant growth in regional markets.”

Domain also released the State of the Market Report – Regional, which looked at property values in regional Victoria, Queensland and NSW.

Here’s a quick breakdown of each of the capital cities:

Sydney – rising

Median house price: Up 1.6 per cent over the quarter, up 12.7 per cent over the last year, reaching a record of $1,178,416.

Median unit price: Up 3.1 per cent over the quarter, up 12.7 per cent over the year to $757,991.

Median house rents: Steady over the quarter, up 3.8 per cent over the last year, to $550 per week

Median unit rents: up 3.8 per cent over the quarter to $550 per week.

“Despite recent record levels of apartment construction, Sydney unit prices are continuing to rise, now at a faster rate than houses. Unit prices recorded a sixth consecutive quarterly increase and the highest growth rate in two years — since the June quarter 2015,” Dr Wilson said.

“Sydney remains the most expensive capital city for tenants, with the median weekly asking rents for both units and houses now over 30 per cent higher than Melbourne.”

Melbourne – rising

Median house price: Up 3.5 per cent over the quarter, up 15.1 per cent over the last year, reaching a record of $865,712.

Median unit prices: Up 2.1 per cent over the quarter, up 4.6 per cent over the last year, to $474,848.

Median house rents: Steady over the quarter, up 5 per cent over the last year, to $420 per week.

Median unit rents: Up 1.3 per cent over the quarter, up 5.3 per cent over the last year, to $400 per week.

“Melbourne’s property market continues to go from strength to strength, recording a remarkable 19 consecutive quarters of house price growth — a series record for any of the Australian capitals — with no signs of slowing down,” said Dr Wilson.

“Despite misplaced predictions of an overabundance of units in Melbourne, unit demand remains well ahead of supply, with price increases expected to continue.”

Brisbane – declining

Median house prices: Down 0.1 per cent over the quarter, up 3.1 per cent over the year, to $546,043.

Median unit prices: Down 5.5 per cent over the quarter, down 4.9 per cent over the last year.

Median house rents: Down 1.2 per cent over the quarter, steady over the last year, to $400 per week.

Median unit rents: Down 2.6 per cent over the quarter.

“As the median unit price in Brisbane continues to fall, we begin to see the impact of record levels of new apartments on the property market, Dr Wilson said.

“The drop of 5.5 per cent this quarter is the steepest fall in unit prices in nearly 17 years (December quarter 2000) and is predicted to continue as supply continues to outweigh demand.”

Adelaide – rising

Median house prices: Up 0.9 per cent over the quarter, up 6.6 per cent over the last year, to $524,968.

Median unit prices: Up 0.9 per cent over the quarter, up 2.9 per cent over the last year, to $312,346.

Median house rents: Steady over the quarter, up 2.9 per cent over the last year, to $360 per week.

Median unit rents: Down 1.7 per cent over the quarter, up 1.8 per cent over the last year, to $290 per week.

“Adelaide remains the most affordable capital city market on the mainland, continuing its resilient performance of recent years despite an underperforming local economy,” said Dr Wilson.

“The city’s house prices continue to deliver solid and reliable results, with the median house price increasing over 11 consecutive quarters”.

Perth – declining

Median house prices: Down 1.8 per cent over the quarter, down 1.1 per cent over the year, to nearly a five-year low of $555,788.

Median unit prices: Down 3.8 per cent over the quarter, up 1.1 per cent over the year, to $377,823.

Median house rents: Down 2.7 per cent over the quarter, down 7.7 per cent over the year, to $360 per week.

Median unit rents: Steady over the quarter, down 10.4 per cent over the last year, to $300 per week.

“Recent indications of a revival of the Perth housing market could be premature, with subdued house prices recording another steep decline over the quarter.  However, despite the fall in median house prices, unit prices are bouncing back and recording solid, positive growth,” Dr Wilson said.

“A tightening of the local rental market coupled with a recent improvement in the WA state economy will likely provide a buffer for future market revival.”

Canberra – declining

Median house prices: Up 3.9 per cent over the quarter, up 8.9 per cent over the last year, to $723,299.

Median unit prices: Down 2.9 per cent over the quarter, down 3.7 per cent over the last year, to $403,128.

Median house rents: Steady over the quarter, up 6.4 per cent over the last year, to $500 per week.

Median unit rents: Down 2.3 per cent over the quarter, up 5 per cent over the last year, to $420 per week.

“Increased confidence in the Canberra property market is reflected in the steady growth of the median house price,” said Dr Wilson.

“However, despite the rise in house prices, Canberra’s decline in median unit prices reflects the recent surge in apartment supply.

“Unit prices are at the lowest in nearly eight years, experiencing the sharpest decline in prices since the September quarter 2004.”

Hobart – rising

Median house prices: Up 4.3 per cent over the quarter, up 15.2 per cent over the last year, to $404,522.

Median unit prices: Up 3.8 per cent over the quarter, up 7.7 per cent over the last year, reaching a record high of $310,854.

Median house rents: Down 1.4 per cent over the quarter to $360 per week.

Median unit rents: Up 4.1 per cent over the quarter, up 14.3 per cent over the last year, to $320 per week.

“The Hobart housing market continues to shine, with the median house price recording its highest growth rate since 2003 and one of the strongest growth rates over the June quarter,” Dr Wilson said.

“Hobart’s boom-time results reflect restored confidence and a strong performance of the local economy.”

Darwin – rising

Median house prices: Up 6.1 per cent over the quarter, up 12.2 per cent over the last year, to $666,686.

Median unit prices: Down 13.4 per cent over the quarter, down 23.5 per cent over the last year, to $351,880.

Median house rents: Down 5.5 per cent over the quarter and the last year to $520 per week.

Median unit rents: Down 4.8 per cent over the quarter, down 9.1 per cent over the last year, to $400 per week.

“The Darwin market is showing positive signs of revival with house prices set to continue to increase as buyer confidence returns and improved affordability from lower prices drives demand,” said Dr Wilson.

“Despite the housing market growth, the current median unit price continues to reflect the record levels of new apartment builds, with the lowest quarterly median since December 2008.”

[Related: Regional markets drive drop in property listings]