But growth is slowing as affordability pressures mount
Property markets have hit new highs across Australia’s major capitals, but the pace of growth is slowing, according to the latest report from Domain.
Combined capital house and unit prices rose for the seventh and sixth consecutive quarters, respectively, reaching record levels. However, the rate of increase is losing momentum, with house prices growing three times slower than in the previous quarter, and units also showing signs of deceleration.
“The pace of price growth has clearly softened across Australia’s capitals, as affordability constraints start to bite,” said Nicola Powell (pictured above), chief of research and economics at Domain. “Higher prices are limiting the buyer pool, especially as wages haven’t kept up with property values, and cost-of-living pressures add further strain.”
According to the new Domain House Price Report, Sydney, Brisbane, Adelaide, and Perth all recorded new peaks in house prices, yet the rate of increase is slowing. In Sydney and Perth, quarterly house price gains more than halved, while Brisbane’s growth slowed by a third.
Adelaide saw only a slight reduction in growth, but Melbourne and Canberra both recorded declines. Melbourne’s house prices dropped by 1.5% – the largest fall in two years – while Canberra saw its first quarterly decline this year.
The unit market shows similar trends. Sydney, Brisbane, Adelaide, and Perth reached record highs for unit prices, with Sydney marking a significant recovery, hitting a new peak for the first time since December 2021. Notably, Sydney and Melbourne’s unit markets gained momentum, while Brisbane, Adelaide, and Perth experienced rapid deceleration.
“For the first time in 25 years, Brisbane has overtaken Melbourne as the second most expensive city for units,” Powell said. “This highlights shifting affordability dynamics, particularly as units in traditionally more affordable cities see strong demand.”
Powell added that the slower price growth reflects a broader trend of softening buyer demand. September saw new supply in the combined capitals reach its highest level since March 2022. But rising stock levels have outpaced buyer interest, with many prospective buyers waiting for possible rate cuts to improve borrowing power. As a result, clearance rates have dipped to their lowest this year, and properties are staying on the market longer.
“Increased stock and fewer buyers are creating a shift towards a buyer’s market in some areas, which may ease conditions for those looking to enter the market,” Powell said.
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