Australian capital city housing prices continued to rise at an accelerated pace in the September quarter despite lockdown disruptions slowing activity in the key Sydney and Melbourne markets. According to the latest data published by the ABS today, national housing prices increased by 5% in Q3 and by a record pace of 21.7% through the year on the back of significant policy stimulus measures in response to the pandemic and tight fundamentals.
Following the record rise of 6.7%q/q posted in the June quarter, Australian capital city housing prices eased back to a still very strong 5%q/q rise in the September quarter. The Sydney (6.2%q/q) and Canberra (6.0%q/q) markets outperformed despite lockdowns, but restrictions appeared to weigh more heavily on the Melbourne market (3.6%q/q). Price growth accelerated in Q3 across Hobart (8.2%q/q), Brisbane (6.1%q/q) and Adelaide (5.9%) but slowed sharply in Perth (2%q/q) and Darwin (1.6%q/q).
Annual growth in house prices lifted from 19.8% to 25.4% to be running at twice the pace of the increase in unit prices (12.4%). The spread between the two is now out its widest for the pandemic with the detached segment benefitting from preference shifts, construction subsidies and upgraders capitalising on rising housing prices.
Conditions across most markets remained tight during the September quarter. Despite the expiry of some of the stimulus measures, demand was very strong supported by the low level of interest rates and the rise in household wealth since the onset of Covid. According to data compiled by CoreLogic, sales were running well above the longer-term average through the quarter compared with previous years. At the same time, the volume of listings remained very low. Some of this weakness can be attributed to the lockdowns in Sydney, Melbourne and Canberra as properties were withdrawn from the market, but listings throughout 2021 were already well below the levels of recent years when Delta struck.
Across the cities, prices in the Sydney market lifted by 6.2%q/q (25.4%Y/Y), moderating from an 8.1% pace in Q2. Growth eased in house prices but was still very strong at 7.4%q/q (32.1%Y/Y) and substantially faster than the rise in unit prices 3.6%q/q (13.4%Y/Y). In the Melbourne market, price growth slowed from 6.1% in Q2 to 3.6% in Q3 (19.5%Y/Y) as restrictions weighed on activity. The slowdown was driven by houses (from 7.2%q/q to 3.8%q/q) as unit price growth was unchanged from the previous quarter at 2.9%q/q.
Prices in the Brisbane market firmed from 5.7% to 6.1% in Q3, with annual growth now at its strongest since 2008 (19.7%). Houses are up 22.2% over the year compared to 9.2% for units. Over in Perth, the quarterly gain pulled back to a 2% rise as both house (2.2%) and unit prices (1.2%) slowed sharply, with the withdrawal of stimulus and affordability concerns likely contributors. The Adelaide market was up by 5.9%q/q, its strongest quarterly rise in 14 years as the pace of house prices picked up to a record pace of 6.8%q/q. Prices in Hobart are up 25.7% through the year, the fastest gain of all capital city markets with both house (26.3%) and unit prices (23.4%) rising at a record rates. In Darwin, prices slowed sharply in Q3 to 1.6% from 4.6% in Q2. In the nation's capital, the Canberra market continued to perform strongly despite its lockdown. Prices slowed in Q3 but were still up by 6%q/q and by 25.2% over the year.