Perth prices continue to surge

Nerida Conisbee,
Ray White Group
Chief Economist

Perth remains the strongest market in Australia with house prices up 15.3 per cent over the past 12 months and 0.6 per cent up in January. Unit price growth is also strong however prices are up slightly more in Adelaide (up 10.4 per cent for the year). Meanwhile, Sydney prices have now declined for the second month in a row. Although house prices in this city are still up 5.8 per cent, they declined by 0.2 per cent in January, after falling by the same amount in December. 

The difference in market conditions reflect the drivers of growth. Sydney is far more sensitive to interest rate changes and it is likely that the softer conditions over the past two months reflects this. Meanwhile, mining conditions in Western Australia and South Australia are not only driving economic growth but also attracting interstate migrants, investors and creating wealth. This is fueling price growth in both Perth and Adelaide. 

The softest markets continue to be Melbourne and regional Victoria. Population growth has increased post pandemic, particularly international migration, and this will be positive in 2024. However, it is likely that the impact of tough pandemic restrictions continue to weigh on economic growth for the state. 

While Sydney saw a decline in price over the past two months, and Melbourne remains comparatively weak, it is likely we will see growth this year for both cities. The probability of a rate cut is now far higher than it was less than six weeks ago. If this does happen, it is likely to fuel price growth in not only our largest cities but also other parts of the country.