Sydney house prices bolted ahead 30.4 per cent over the 12 months to September in the fastest annual gain on record, but the rate of growth is slowing markedly as new listings outpace sales, according to fresh data from Domain.
During the September quarter, Sydney house prices climbed by just 4.6 per cent to a median of $1.5 million, with about half of the gains achieved during the March quarter and at significantly lower rate than the previous three months when values rose by 8.2 per cent.
Domain’s chief of research and economics Nicola Powell said worsening affordability and additional supply had dramatically slowed the growth momentum.
Sydney’s vendors have added 29 per cent new listings during September, which has lifted the total housing stock by 16 per cent from the multi-year low recorded in January.
“This suggests that homes are being listed for sale quicker than they are being purchased, which is a significant shift from earlier in the year,” said Dr Powell.
“While conditions remain to favour sellers, the added supply will provide more choice and help to ease tight buyer competition.
“We expect supply will remain strong throughout the coming months, and demand will become further constrained by affordability, helping to moderate strong price gain.”
Tim Snell, Ray White chief performance officer for NSW, said the added stock will help rebalance the market.
“It’s been a sellers’ market for some time, but with demand easing a bit, we’re now heading to a more balanced market,” he said.
Demand has already fallen since the March peak, with the number of home loans for NSW owner-occupier first-home buyers dropping by 21 per cent and by 13 per cent for upsizers.
“The sheer affordability of keeping up with rapid house price gains is proving a barrier for buyers,” said Dr Powell.
“This is another sign that the rapid price gains are behind us, and we’re past the peak rate of gains. So while prices will still rise, it will be lower compared to what we have seen.”
By contrast, Melbourne house prices have more room to grow even after gaining 16.8 per cent over the past year to a record of $1.038 million, Dr Powell said.
“I think there’s more pent-up demand in Melbourne as prices have not risen by the same rate as Sydney,” she said.
“Since the beginning of the pandemic, Melbourne has seen the second-lowest house price gain of all the cities, which could signal the city has more scope for growth as it emerges from lockdown.
“Despite new listings jumping by 66 per cent over the month in September, the unseasonably strong buyer demand has kept total supply low in comparison.”
In Brisbane, the median house price has crossed the $700,000 mark for the first time after values jumped 15.3 per cent over the year to $702,455.
Adelaide house prices climbed by 20.1 per cent over the year – the strongest annual price increase since 2008, while Hobart surged 31.9 per cent – its strongest growth in 17 years.
Canberra rose 32.4 per cent and Darwin notched 33.2 percent during the same period. Perth was the weakest market with just 9.8 per cent annual growth.
Nationally, house prices rose 21.9 per cent over the year and 3.5 per cent over the September quarter.