Quick Bite – Aust House Prices on the March … Again
The Cotality Capital City Dwelling Prices report for September showed price rises across the month (+0.9%mom), quarter (+2.3%qoq) and year (+4.3%yoy).
Regionally, the increase in prices was broad based across all capital cities, with Brisbane (+1.2%mom), Perth (+1.6%mom), and Darwin (+1.7%mom) recording the largest rises. Price growth continued to lag in Melbourne (+0.5%mom) and Hobart (+0.1%mom), while Sydney recorded a modest gain (+0.8%mom).
In the rental market, advertised rents increased 0.5%mom in September, with the quarterly growth rate rising to 1.4%, the highest since June last year. Cotality noted this came alongside vacancy rates reaching a “new record low of 1.4% in September”.
Growth in dwelling prices was broadly based across all capital cities in September.
Source: Goldman Sachs
House prices have been rising since March with the RBA interest rate cuts, and prices are probably set to accelerate with the new first home buyer lending rules. Under the new rules, from the start of October 2025, first home buyers (with no means testing) will be able to borrow 95% of the purchase price of a property with just a 5% deposit, and they will not be required to buy mortgage lenders insurance (LMI) for lending above 80% of the purchase price. Taxpayers will now bear the risk of any value shortfall.
This is a poor policy solution and will do little to help young people afford their first home; indeed, it is likely to push prices up higher and faster. If the government was serious about inter-generational inequity, it would pressure local councils, state and federal governments to release more land for building, and reduce red and green tape compliance rules gumming up the house construction industry.
Government should incentivize migrants with skills needed to meet the housing shortage: bricklayers, plumbers, electricians, cabinet makers, carpenters, etc. Clearly, government couldn’t care less because there are far more voters who already own homes, and are happy to see house prices rise, than there are young people trying to get into the housing market for the first time.
We think house prices are likely to continue to go up, given the number of migrants and the lack of urgency in housing construction.
As Ashley Owen writes, “Housing is still the number one wealth builder for Aussies. Housing and rental properties are still the largest asset and the most favoured wealth-building scheme in Australia. Numerous surveys show that most Aussies still regard the superannuation system as too complex, vague, opaque, and remote. Housing is much more real, concrete, tangible, and owner-occupied housing is still the most tax-advantaged asset of all.”
Source: Owen Analytics
