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ustralian property prices continued their upward trend in August, driven by a combination of lower interest rates, rising real wages, and buyer optimism. However, this growth is being constrained by a shortage of homes for sale. According to Cotality's figures, national home values rose 0.7% in August, the strongest monthly gain since May last year, with a median value of $848,858.

    Brisbane recorded the highest monthly capital city rise, up 1.2%, while Hobart was the only capital where values fell, down 0.2%. Sydney remained Australia's most expensive city, with a median value of $1,224,341. Melbourne has become more affordable than smaller capitals like Brisbane and Adelaide.

    Eliza Owen, head of research at Cotality, attributed the rising home values to increased demand and low supply. She noted that advertised home listings were down about 20% compared to usual, with around 120,000 properties on the market for sale, whereas the five-year average would be 150,000.

    Real estate agents in Brisbane and Sydney reported strong competition for available properties, with owner-occupiers outbidding investors at auctions. Agents expressed hope that spring would bring an increase in property listings, which could ease the shortage of homes for sale.

    Brisbane's market is benefiting from buzz around the upcoming Olympic Games and infrastructure investment, while affordability remains a handbrake on growth. Further interest rate cuts are expected to add fuel to price growth, but stretched affordability may cap momentum.

    The expanded First Homebuyer Guarantee scheme, set to launch in October, is expected to bolster demand among first-home buyers with smaller deposits. However, some analysts question Treasury's forecast that the policy will lift home values by only 0.5% over six years, predicting a larger short-term boost due to tight supply levels and lower interest rates.

    Rental vacancies remain near record lows, with national rents recording the fastest monthly growth since May last year, up 0.5%, taking annual growth to 4.1%. Darwin is leading capital rental growth, while Sydney has the highest advertised rents.