Where property prices are slowing the most, and the areas outperforming

Property price growth is continuing to slow as the year goes on, PropTrack’s inaugural Home Price Index report has revealed, following one of the most exceptional years for the housing market in Australia’s history. 

But the level of slowing isn’t equal across the country, with some smaller capital cities and regional areas continuing to outperform the major markets.

The new PropTrack Home Price Index Report showed property prices increased on average by 0.34% nationally in March, the slowest pace of growth since May 2020 according to the report’s author, PropTrack economist Paul Ryan.

“While price growth has slowed dramatically, it is comparing to an exceptional period,” Mr Ryan said. “2021 saw the fastest growth in over 30 years.”

Property prices surged 23% in 2021, largely driven by a combination of low interest rates, government incentives, low supply and high demand.

Mr Ryan says the slow down in property prices reflects the reduced influence of lower interest rates.

“Fixed mortgage rates have already increased over recent months and larger rises are expected as the Reserve Bank of Australia increases the cash rate – widely expected later in the year,” said Mr Ryan.

The cities where prices are still rising

The average price of a home in Sydney, Australia’s most expensive city, grew by 0.32% in March. Mr Ryan said that’s around half the average monthly growth Sydney has been experiencing over the past decade.

“Momentum in Sydney has been slowing for several months, with annual price growth now at the slowest pace since March 2021,” said Mr Ryan.

“This may be partly due to stretched affordability, with the median house in Sydney estimated to now be worth over $1.2 million.”

Brisbane, Hobart and Canberra also registered price growth over the month of March but, like all cities, prices were still noticeably slowing.

Mr Ryan said Adelaide was the stand-out city, recording the strongest momentum of the capital city markets (up 0.84%).

“Price growth in South Australia was the highest across the country in March,” said Mr Ryan.

“Prices have increased by 25% over the past year in Adelaide, more than twice the rate seen this time last year.”

The strongest price growth was recorded in Adelaide’s south. Local real estate agent Marco Wenzel from Harris Real Estate said sellers were choosing to capitalise on the strong market.

“When we’ve got a situation where someone’s selling because they want to, not because they have to, they’re not going to let go of property for less than they purchased it for,” said Mr Wenzel.

Mr Wenzel said he noticed a slight slowing down of the market last month.

“We have got a few extra properties on the market and the same number of buyers still competing so there is just some softening there, just a little bit,” said Mr Wenzel.

Values falling in some capital cities

While most cities continued to see modest growth, the national average was brought down by cities like Melbourne, Perth and Darwin – which saw prices decrease during the month.

“Home prices were flat in Melbourne, with price growth slowing considerably since mid-2021,” said Mr Ryan.

“Prices increased by 10% over the year to March 2022, the slowest rate since the onset of the pandemic.”

Prices fell very slightly in Melbourne in March, with larger falls recorded in Perth and Darwin. Picture: realestate.com.au

Melbourne based buyer’s advocate and Property Mavens CEO Miriam Sandkuhler said it’s clear the heat is coming out of the market.

“The market has become more balanced between buyers and sellers, which is giving buyers more choice and time to think about what they want to buy, rather than being forced to act quickly,” Ms Sandkuhler said.

With buyers getting more choice, Ms Sandkuhler said sellers of properties that aren’t considered ‘A-grade’ are finding it harder to secure a sale and many are being forced to drop their asking prices.

The falls in Perth and Darwin’s property markets were more substantial than Melbourne’s, down 0.11% and 0.61% respectively.

“Perth continues to be the weakest state capital market, with prices growing less than 8% over the past year,” said Mr Ryan.

“In March, prices fell slightly, with unit prices continuing to fall across the city.”

The median price of a home in Perth is now $520,000.

Regional Australia still attractive to buyers

The report showed prices grew faster in the regions than they did in most cities during March.

“Regional areas continue to outperform the capitals in the post-pandemic market,” said Mr Ryan.

“Prices have increased 25% in the past year in regional areas, but only 16% in the capitals.”

At the same time Adelaide registered the strongest growth of the cities, regional South Australia experienced the strongest growth of the regions, up 1.03% over the month.

“Regions surrounding the ACT in New South Wales are also seeing strong price growth, showing the strong momentum in our nation’s capital is impacting nearby markets,” said Mr Ryan.