Housing Prices Break Records as Demand Surges

Home values across Australia have climbed to record levels in several key suburbs, driven by a mix of buyer demand and government proposals that could inflate prices even further - while highlighting ongoing supply challenges. Though designed to support first-time buyers, current policy plans from both major political parties risk accelerating home price growth faster than supply can catch up.

Australia’s housing market has staged a sharp bounce-back over recent months, with median home prices hitting new highs in affordable suburbs around Sydney, Melbourne, and beyond. In particular, outer metropolitan areas that appeal to first-home buyers are seeing the strongest gains, buoyed by new federal housing initiatives and hints of potential interest rate cuts.

Recent data shows nearly one in three suburbs nationwide hit record highs for house prices in the last quarter. In Sydney, house prices peaked in more than 16% of suburbs, and unit values reached record levels in about 13% of areas. Melbourne saw gains in both eastern and north-western suburbs, where 3% of houses and 4% of units climbed to new highs. Cheaper areas in Sydney’s southwest, like Campbelltown and Cabramatta, recorded increases up to 6% in just three months, pushing their median values to just under or above the $1 million mark.

Market analysts say the combination of low deposit schemes and buyer incentives from both major political parties is stoking more demand than supply can handle. While these policies aim to make housing more accessible to first-time buyers, they seem to be triggering rapid price growth in already competitive suburbs. If interest rates fall soon, as some expect, that may fuel demand even more.

The upswing isn’t confined to Sydney and Melbourne. Cities like Adelaide and Brisbane also saw record prices in over half their suburbs. In Perth, about 30% of all suburbs reached new peaks as well, with growth rates as high as 4.4% in some areas. As more buyers enter the market and confidence grows, price momentum looks likely to hold, especially in areas still considered “affordable” for middle-income buyers.

Source: Australian Financial Review, Global Property Guide, Property Update