Adelaide homes may soon be more expensive than Melbourne, with property prices falling in the Victorian capital for the fourth month in a row while prices in Adelaide continue to climb.
Melbourne homes are now worth 4.4% less than they were at their peak in 2022, and fell 0.21% in July, according to PropTrack’s latest report.
The ongoing slump for the Victorian city in July – attributed to more property listings and higher construction rates – was in stark contrast to other capital cities, with Perth, Adelaide, Brisbane, Sydney and Canberra all showing growth.
Perth’s property market has seen the strongest annual growth, with a 22.77% increase this year, up 72.2% on March 2020 and the onset of the pandemic.
Prices in Adelaide have risen by 14.81% over the year and 0.58% in July, with the median value of a dwelling in the South Australian capital currently sitting at $770,000.
PropTrack senior economist Paul Ryan said: “The relative affordability across the city has made Adelaide the strongest performing market since the onset of the pandemic. But ongoing price growth means values may eclipse Melbourne over the coming year.”
The median value of a Melbourne dwelling was $803,000 in July. Despite the slow decline in the last quarter and more, it was still 15.8% above March 2020.
Hobart has seen a steeper decline, with prices down 2.1% over the past year and 9.4% lower than its peak in 2022. But this should be seen against the fact that “Hobart entered the pandemic as the strongest performing market, with values up a significant 43% over the past five years”, Ryan said.
In Sydney, home prices increased 0.12% in July, up 6.1% over the year, with growth strongest in the inner south-west and south-west of the city.
Nationally, PropTrack reported home prices were 6.3% higher than they were this time last year, and overall increased 0.08% in July.
CoreLogic’s quarterly home value index, also released on Thursday, said that while housing market growth remained positive, “it is clear momentum is leaving the cycle and conditions are becoming more diverse”.
CoreLogic’s research director, Tim Lawless, said supply was the driving factor in the difference across the cities.
“The number of homes for sale in Brisbane, Adelaide and Perth is more than 30% below average for this time of the year, while weaker markets like Melbourne and Hobart are recording advertised supply well above average levels,” Lawless said.
Buyers were orienting mainly towards lower-cost dwellings due to reduced borrowing capacity and affordability, and units were rising faster than houses across most of the capitals.
“Most cities now have a median house value that is at least 1.5 times higher than the median unit value,” Lawless said. “With stretched housing affordability, lower borrowing capacity and a lift in both investor and first-home buyer activity, it’s not surprising to see the unit sector outperforming for a change.”
The increasingly patchy market comes as housing approvals hit their lowest level in 12 years. The Australian Bureau of Statistics on Tuesday cited high interest rates and rising labour and material costs as key factors behind approval rates in the year to June, being down 8.5% on the previous year and at the lowest level since 2011-12.
