H
ome prices have reached an all-time high after experiencing 20 months of consecutive growth, giving sellers an advantage as they enter spring. According to PropTrack's Home Price Index, national home prices have increased by 6.16% compared to last year, with August seeing a 0.22% increase to a new peak. The report highlights strong population growth, tight rental markets, and increased home equity as key factors driving demand.

    In the combined capital cities, prices have risen by 6.49% over the past year, with August seeing a 0.25% increase. However, the growth rates varied across capitals, with Perth (+0.79%), Hobart (+0.63%), and Adelaide (+0.45%) recording the strongest growth. Despite winter months slowing down growth in Sydney, prices still rose by 0.32%. On the other hand, Melbourne saw a decline of 0.18% marking the fifth consecutive month of decline.

    The report also pointed out that building activity remains challenging due to a severe shortage of housing. The recent tax cuts in July have boosted borrowing capacities and buyers' budgets, further fueling housing demand. Despite affordability constraints, the persistent growth in home prices is motivating many to overcome these challenges.

    As we move into the spring selling season, housing demand is expected to increase, but this may be offset by factors such as uncertainty around interest rate cuts and affordability constraints. These factors are likely to dampen the pace of price growth.

    Perth, Adelaide, and Brisbane have consistently recorded the fastest pace of growth among capital cities for the past two years, with Perth leading the way at 23.24% growth in the past year. Adelaide followed closely at 15.12% growth, while Brisbane saw a 13.95% increase. Growth was not limited to just capital cities; regional areas also saw an increase of 0.16% over the month to be 5.32% above August 2023 levels.

    Regional Western Australia and regional Queensland led growth in August and over the past year at +0.41% and +0.26% respectively. However, regional Victoria experienced a decline of 1.74% over the same period.

    According to PropTrack Senior Economist and report author Eleanor Creagh, tax cuts from July have boosted borrowing capacities and buyers' budgets, contributing to the persistent growth in home prices. This growth is motivating many to overcome affordability challenges, resulting in buoyant housing demand that defies affordability constraints and pushes prices higher across much of the country.