Three of Australia’s capital cities are leading the charge when it comes to robust inner city price growth, according to new research released Thursday.
PRD’s latest Australian Economic and Property Report 2021 reveals that Darwin, Brisbane and Adelaide have had the strongest inner city house price growth, with increases of 23.4 per cent, 11.6 per cent and 11.2 per cent respectively during the first half of 2021 alone.
Despite this strong growth, Darwin’s inner city median house price sits at just $580,000 and Brisbane’s at $792,250 – well below Sydney’s $1.725 million and Melbourne’s $1.103 million. Adelaide, on the other hand, recorded an inner city median of $1.04 million.
While home values continue to soar across the country, some inner city markets have been left behind as buyers seek out more space in the suburbs.
During the same time frame, Sydney and Melbourne actually saw more subdued – or even negative – inner city price growth. House price growth in inner Sydney was just 4.9 per cent while inner Melbourne house prices dropped by -11.6 per cent.
Author of the report and chief economist at PRD, Dr Diaswati Mardiasmo, said the data collected for their “Capital City” figures included the central Local Government Area of each capital, but was expanded for Sydney and Melbourne to include property within a 20kms radius of the CBDs, to give a more even snapshot of the house market.
“We also wanted to take a look at just houses, and not units or townhouses, because then we were able to make a fair comparison with regional areas,” she explained.
Dr Mardiasmo said that the underlying reason these three smaller Australian capitals saw such strong inner ring price growth was due to a lower starting point.
“Brisbane has long been a little sister to Sydney and Melbourne when it comes to price, so it means there has been a lot of room to grow,” she said.
“The median house price has been, and still is, nowhere near Sydney and Melbourne, even though it’s grown so much. And there still is a lot of growth potential in Brisbane, and across Queensland in general.”
She added that internal migration, and out-of-state investment during the first half of the year also played a large part in the price growth of the smaller capitals.
“Also, Covid has not been as the debilitating in Brisbane as it has been in Sydney and Melbourne, or more broadly in NSW and Victoria. I think this has simply lead to a lot more property demand in Brisbane from homebuyers who are either wanting enter the local market or seeing new opportunities to upgrade,” she said.
For Darwin, Dr Mardiasmo said that demand had also increased significantly in the inner city and wider metropolitan areas, with first home buyers playing a larger role.
“When we look at the amount of first home buyers in Darwin for example, that has really pushed up prices there,” she said.
“The number of first homebuyer loans in Darwin in first quarter of 2020 was only about 200 people whereas that’s gone up to around 350.
“I know that doesn’t sound like much in comparison to NSW or Victoria which has thousands, but for Darwin that’s a real jump.”
The report also crunched the numbers on metropolitan markets – which covered the greater capital city footprints including the inner, middle and outer rings of each city – and Darwin still leads the race with 20 per cent house price growth over the first half of 2021.
Taking out second and third place was Sydney at 9 per cent and Brisbane at 9.9 per cent growth.
Unsurprisingly, the regional markets were home to the most extraordinary house price growth. In Victoria, the state which has experienced the most lockdowns, there was the greatest increase of 19.1 per cent.