Of local interest, regional prices climbed 0.6% in October and were up 7.9% year-on-year. Regional NSW prices were ahead of the national average at 0.7%. Regional areas have outpaced the capitals over the past year (7.9% vs 7.4%) and five years (64.2% vs 47.0%), supported by relative affordability and lifestyle appeal. However, regional outperformance is narrowing as capital cities lead the current upswing.
National home prices rose 0.6% in October, extending the upswing to a 10th straight month and lifting values 7.5% higher than a year ago, the strongest annual pace since May 2024.
Increased borrowing capacities, lower mortgage rates and improving sentiment are fuelling renewed competition, but the pattern of growth is shifting.
But how will this week’s RBA rate decision to keep rates at 3.6% influence the market? Pundits say that a hold on interest rates can lead to a cooling of the property market after a period of high growth, particularly as the RBA aims for a gradual return to stability.
On the other hand, low borrowing costs can contribute to increased demand, which in turn can drive up property prices, making it harder for first-time buyers.
Add to this the Government’s 5% deposit scheme looks set to drive prices higher. Economists have warned the expanded scheme will likely push up prices and worsen housing affordability. But on the other hand, it offers first home buyers a real chance to get onto the property ladder at a much-reduced deposit price.
Some pundits forecast `rates on hold or even increasing’, while other economists forecast two interest rate reductions in 2026. If only we had a crystal ball!
Over the past year, Darwin, Hobart, Melbourne and Sydney have seen the fastest acceleration in annual gains with these previously softer markets regaining momentum. In contrast, the pace of annual growth is easing from earlier highs in Brisbane, Adelaide and Perth, though prices are still at record levels and continue to rise briskly.
All regional markets have slowed, except regional Victoria, narrowing regional market outperformance. Nationally, annual growth has lifted above the 30-year average, yet stretched affordability is a handbrake on growth, which remains well below the 20-30% pace of past booms.
“Looking ahead, this year’s series of rate cuts, population inflows and the expanded Home Guarantee Scheme will continue to bolster demand. With stock on market constrained and new supply challenged, conditions remain tilted toward sellers. The market appears set for further price gains throughout spring and into summer.”
This is great news if you are planning to sell, however, surging property prices significantly impact first home buyers or buyers looking to move up in the property market.