Quick Bites | House prices up yet again

Another month, another house price rise. How long can it last?

Source: Goldman Sachs


According to CoreLogic, Australian capital-city house prices rose +1.4% in May, marking the largest gain since October 2021 and the third consecutive increase since February. The increase was driven by Sydney (+1.8%) and Brisbane (+1.4%).

While prices are still around 7% below the peak in early 2022, a continuation in the current pace of gains would see prices return to the peak in late 2023. That said, we expect a further rate hike (or hikes) by the Reserve Bank of Australia (RBA) over the coming months which will likely cool house prices over the second half of the year.

On sales activity, CoreLogic highlighted that “estimated home sales have shown some subtle upwards movement, with the number of capital city dwelling sales rising over the past three months to the highest level since July last year.” That said, sales activity remains below the recent peak and the overall level of listings remain below average.

On the rental market, capital-city rents rose a further +1.0% month-on-month (mom) in May, a slight easing relative to April (+1.1% mom) but still very elevated. CoreLogic noted the increase in rents continued to be driven by the high-density sector, noting that “while rental demand remains high, we aren’t seeing much sign of a supply response. Capital city rental listings were 36.4% below the previous five-year average at the end of May.”