Home Values Soar in Sydney and Brisbane

Sydney's home values have fully rebounded from the recent downturn, rising by 0.6% in May, the fastest growth in three months, according to CoreLogic.

The city's median dwelling value is now $1,156,020, matching the record from January 2022, with prices up 14.1% since their lowest point in January last year. Nationwide, house prices increased by 0.8% in May, the largest monthly rise since October. CoreLogic's Tim Lawless highlighted the market's resilience despite high interest rates and economic pressures, attributing the rapid recovery to a persistent supply shortage that continues to drive prices up.

Brisbane has surpassed Canberra as Australia’s second most expensive capital city, with a median dwelling value of $843,231.

This marks the first time since 1997 that Brisbane holds this position. Brisbane’s home values increased by 1.4% in May, while Canberra’s rose by 0.5%. Over the past six months, Brisbane has consistently seen over 1% monthly growth, while Canberra remained flat.

Brisbane also overtook Melbourne earlier this year due to Melbourne's lower unit prices. Now, Brisbane’s median house value is $937,479, slightly higher than Melbourne’s $937,289, and its median unit value is $615,429, surpassing Melbourne’s $614,299.

CoreLogic’s Tim Lawless attributes Brisbane’s strong demand to high interstate migration and active investor interest, amid a significant supply shortage. Perth and Adelaide also saw strong home value increases, while Melbourne’s growth was minimal, and Hobart and Darwin experienced declines.

Perth and Adelaide have seen significant home value gains due to low listings, while Melbourne and Hobart have higher listing levels. Over the past three months, Perth's values rose by 6.1%, Brisbane by 3.9%, and Adelaide by 4.3%, with Sydney, Darwin, Canberra, and Hobart also experiencing increases. Melbourne's values have declined since the start of the year.

AMP's Shane Oliver highlighted a supply shortfall, with housing demand far outpacing building approvals. HSBC's Paul Bloxham noted that high immigration continues to fuel demand, despite rising interest rates and rental costs. Challenger's Jonathan Kearns expects resilient households due to rising wages and limited housing stock, predicting stable interest rates until mid-next year.

The Fair Work Commission's upcoming wage review may boost wages by 3.5% to 4%, affecting housing affordability. Deutsche Bank's Phil O’Donohue foresees rate cuts by November, though he doubts this will significantly impact house prices due to potential higher unemployment rates.