Low supplies of houses for sale are keeping upward pressure on prices despite conditions that would normally dampen demand.
Real estate research group Cotality estimates the number of homes advertised for sale in January was 19 percent below levels at the same time last year.
There were also 25 percent less homes for sale than the five-year average for this time of year.
“At the same time, the rolling quarterly number of home sales was estimated to be 2.7 percent higher than a year ago and only 1.8 percent below the five-year average,” the Cotality January Home Value Index report, released this week, said.
The Home Value Index showed that Australian home values rose by 0.8 percent in January, a “subtle acceleration” from the 0.6 percent increase recorded in December.
Cotality research director Tim Lawless said, while the market was showing resilience, momentum was likely to slow down.
“Despite the most unaffordable conditions on record in many cities, along with a rebound in cost of living pressures and prospect of a rate hike…we are still seeing a broad-based rise in housing values,” he said.
“The ongoing capital gains reflect persistently low inventory in the face of above-average housing demand, however we are likely to see demand side pressures gradually ease in 2026.
“Affordability and serviceability constraints are likely to naturally dampen demand, but also renewed cost of living pressures and a strong chance that interest rates will rise. There is also slowing population growth to consider.”
Mid-sized capitals, like Brisbane, Perth and Adelaide, continued their “solid growth run”, but some momentum had left those markets.
Perth values were 2.0 percent higher in January. Brisbane’s monthly gain has slowed from 2.0 percent in October last year to 1.6 percent in January, and Adelaide’s monthly increase dropped back to 1.2 percent from a 1.8 percent rise in December.
Sydney and Melbourne recorded a 0.2 percent and 0.1 percent increase respectively in January, a slight pickup after slight falls in December.
“(The) trend of stronger growth conditions at lower price points is supported by intense competition for more affordable houses,” said Mr Lawless.
“This is where first home buyers, investors and, progressively, mainstream demand is most concentrated.”
The full report can be found here
