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PropTrack’s latest Home Price Index has revealed that national home prices rose slightly by 0.13 per cent in March, with the cumulative increase for 2023 now sitting at 0.49 per cent.
The index showed that although home prices have declined from their peak in most markets, national home prices are still 29.9 per cent above pre-COVID-19 levels.
Leading the price rises were Sydney, Perth, and Melbourne at 0.27 per cent, 0.24 per cent, and 0.12 per cent, respectively, while Hobart, Darwin, and Brisbane recorded falls of 0.43 per cent, 0.10 per cent, and 0.06 per cent.
Sydney experienced the largest correction of all the capitals, with home prices falling 7.19 per cent from peak to trough.
The report suggests the recent bounce may have been influenced by tax changes implemented by the former Liberal NSW government that allowed first home buyers the choice of paying an annual land tax instead of a one-off stamp duty, which boosted upfront purchasing power.
Home prices for Adelaide rose to a “new peak” in March, up by 0.10 per cent, and up by 6.26 per cent on an annual basis, making it the strongest-performing capital over the past year.
Prices for Canberra eased in recent months, rising slightly by 0.03 per cent, and are now 5.98 per cent below the March 2022 peak.
According to PropTrack, interest rates were the primary driver of price declines to date, however, the recent upturn was influenced by the limited supply of properties for sale.
“While the significant reduction in borrowing capacities and deterioration in affordability caused by interest rate rises implies larger price falls, the impact of rate rises is being counterbalanced,” the report stated.
“Positive demand drivers offsetting the downwards pressure include the strong rebound in immigration, tight rental markets and (slowly) increasing wages growth.”
The report further stated that if the Reserve Bank of Australia (RBA) decides on a pause at the April meeting, the bottoming process may continue with home prices stabilising even further.
Additionally, uncertainty from borrowers in regard to borrowing capacities and mortgage servicing costs will also ease and could result in boosted confidence.
PropTrack noted that headwinds still persist and the full impact of the RBA’s rate hikes is yet to be felt.
“This means the decline in prices could still find a second wind, particularly if new listing volumes increase in the coming months,” the report stated.
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