- House prices have surprisingly bounced back despite higher interest rates
- Strong population growth at a time of tight supply is the most likely cause
- A slowing economy, the potential for more rate hikes and low affordability will cap house price growth over the next 18 months
- Melbourne, Perth, and Brisbane appear to offer better value than Sydney and Adelaide.
What has happened with house prices this year?
It seems every year there is one big economic surprise. In 2021, it was how quickly the economy rebounded from the COVID lockdowns (as well as the aggressive rise in house prices). Last year it was the return of inflation. This year it has been the rise in house prices despite the ongoing increase in interest rates.
As often happens, house prices have risen by more in some regions than others. Property of any sort in Sydney and regional SA have risen strongly so far this year, as have houses in Perth.
The biggest rise this year has taken place in units in regional WA. Dwelling prices were higher in most other places although standalone house prices in Tasmania have declined and there have been a small reduction in the price of regional Victorian and Canberra houses.
To read my full update, click here.
We live in interesting times.
Peter Munckton - Chief Economist