Australia’s home-price gains accelerate even as rate hike looms
Perth has recorded the fastest price growth at 2%
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[SYDNEY] Australia’s home-price growth gathered pace in January, underscoring the challenge for Reserve Bank of Australia (RBA) policymakers as they weigh interest-rate increases in a property market already grappling with stretched affordability.
The Home Value Index advanced 0.8 per cent, accelerating from a 0.6 per cent gain in December, property consultancy Cotality said on Monday (Feb 2). Perth recorded the fastest price growth at 2 per cent, followed by Brisbane’s 1.6 per cent and Darwin’s 1.5 per cent.
Bellwether market Sydney rose a modest 0.2 per cent, while Melbourne climbed just 0.1 per cent, taking gains across the nation’s major cities to 0.7 per cent. The report comes as economists and financial markets expect the RBA to raise rates this week for the first time since November 2023, with inflation – driven in part by housing-related costs – remaining stubbornly elevated.
“Despite the most unaffordable conditions on record in many cities, along with a rebound in cost of living pressures and prospect of a rate hike as early as this Tuesday, we are still seeing a broad-based rise in housing values,” said Cotality’s research director Tim Lawless.
He expects demand-side pressures to cool this year as affordability and loan-serviceability constraints push buyers to the sidelines, helping to slow price momentum.
Highlighting the persistent demand-supply imbalance, Cotality’s report showed the number of homes advertised for sale was down 19 per cent on a year ago, while rolling quarterly home sales were estimated to be 1 per cent higher. As a result, price growth across most cities is being driven by activity at the lower end of the market, Lawless said.
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“In this environment, a slowdown in value growth, rather than a sharp reversal, appears the more probable path, unless economic or credit conditions deteriorate more than expected,” he added.
The dynamic has also put upward pressure on rents, with Cotality’s Rental Index rising 0.6 per cent in January, the strongest monthly increase since April. Over the past five years, weekly rents nationwide have jumped 42.4 per cent, compared with an 8.2 per cent gain in the preceding five-year period to January 2021. BLOOMBERG
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