Adelaide And Perth Surpass Melbourne In Property Values

Adelaide's median property price surpassed Melbourne's for the first time on record in August, climbing 1.4% to reach $790,789. This positions Adelaide as the fourth most expensive capital city in Australia, following Sydney, Brisbane, and Canberra, according to CoreLogic's Home Value Index.

Perth also saw its median home value exceed Melbourne's for the first time since February 2015, when it rebounded from the iron-ore boom's peak. Perth's median home value increased by 2% in August, reaching $785,250.

On a national scale, property values rose by 0.5% in August, marking the 19th consecutive month of price increases. Brisbane's median property price climbed 1.1% to $875,040, making it the second most expensive capital city after Sydney.

However, the rate of property price growth appears to be slowing down. The quarterly increase in national home values is now less than half of what it was during the same three-month period last year.

Eliza Owen, CoreLogic's Head of Research, noted that while seasonal factors may have contributed to the weaker price growth observed over the winter, affordability constraints are becoming a significant issue.

“The seasonally adjusted Home Value Index showed a stronger result over the three months to August, with a 1.7% increase. However, this is a decline from the 3.3% growth seen in the winter of 2023,” she explained.

Owen also pointed out that the rapid price growth in Adelaide, Perth, and Brisbane is not sustainable. “Housing values cannot continue to rise at the same rate in mid-sized capitals like Perth, Adelaide, and Brisbane, especially as affordability becomes more strained due to high interest rates, a loosening labour market, and cost-of-living pressures.”

Melbourne's property values have declined for six consecutive months. Owen highlighted that the increased tax burden on investment property owners in Victoria, evidenced by an annual drop in the number of investment loans secured in the state, might deter demand. However, she noted that this is not the only contributing factor.

“Supply is another significant issue for Victoria, which has seen more dwelling completions over the past decade than any other state or territory,” she added.

The skew in Melbourne's median dwelling value is also influenced by the number of apartments, with around a third of homes in the city being units, compared to just 16% in Adelaide and Perth.

Relief for Renters on the Horizon

Renters may soon experience relief as rent growth shows signs of slowing. CoreLogic's hedonic rent index remained unchanged for a second consecutive month in August, with rent values in Sydney declining for two months.

Annual rent growth is slowing across all capital city markets except for Hobart, recovering from a dip in rental values last year.

“On the demand side, net overseas migration has decreased, with ABS data indicating a drop from 165,000 in the March quarter of 2023 to 107,000 in the December quarter. Additionally, overseas arrivals data points to a decline in international students,” Owen noted.

“On the supply side, investor trends differ from state to state; however, nationally, investor loans secured rose by 10.7% in the year to June.”

Recent data from the Reserve Bank revealed a slight increase in average household size, which may suggest a rise in share housing or multi-generational family homes as a response to high rental costs.

As the property market evolves, long-stay accommodation options in Adelaide are becoming increasingly important for those seeking stability amid the fluctuating rental market. With the rising median property prices, many individuals and families may find long-stay accommodations a more viable option than purchasing or short-term renting.