Home prices head north as Darwin heats up

The latest rate cut has spurred on a new phase of home price growth across Australia, with values climbing to record highs in August.

Property prices rose for the seventh consecutive month in August, fuelled by increased borrowing capacities and improved confidence as a result of the Reserve Bank’s rate cutting cycle.

Australia’s median home price rose by 0.5% in the past month and 5.3% in the past year to a new record high of $834,000.

A typical Australian house is now $54,700 more than a year ago, according to the PropTrack Home Price Index, while typical unit prices are $33,600 higher.

Prices rose in almost all the capitals, with but Darwin was the strongest city for both monthly and annual growth.

REA Group senior economist Eleanor Creagh said the easing of interest rates meant this year’s spring market was shaping up to be strong.

“With three RBA rate cuts delivered this year and further reductions expected, borrowing costs are easing, sentiment has improved, and demand is rebuilding as we head into the spring selling season,” she said.

“Auction clearance rates have strengthened and nationally enquiries per listing are at a three-year high, signalling renewed competition.”

How home prices changed around Australia in August

Ms Creagh said price growth was entering a more uniform phase, with the gap in growth rates between Australia’s fastest and slowest growing capitals shrinking.

“The housing upswing, once narrowly led by a handful of cities, is broadening,” she said.

“Price growth across the capital cities is increasingly synchronised, following 2024’s divergent performance.”

Darwin home prices heat up

The data shows Darwin has quickly risen through the ranks to become Australia’s hottest capital city market.

Prices in Australia’s most affordable capital city are now growing faster than anywhere else, with Darwin home values climbing 0.8% in August and 10.4% in the past year.

Darwin’s median house price reached $630,000, while the median unit price climbed to $418,000. Despite rapid growth, it’s still more affordable than any other capital.

The city’s housing market has boomed this year, driven by hoards of investors targeting affordable properties with high rental yields amid a supply crunch.

There were 41% fewer properties on the market in Darwin in July, according to the latest PropTrack Listings Report – a bigger reduction in supply than in any other capital.

Darwin is Australia’s smallest capital by far, meaning an influx of interstate investors can have an outsized effect on home prices, especially when there are fewer homes on the market.

Brisbane, Perth and Adelaide remain strong

Rapid home price gains have put Darwin ahead of Brisbane (up 9.6%) Perth (up 9.2%) and Adelaide (9%) in terms of annual price growth.

While values are still growing strongly in these cities, growth has slowed a little from the faster pace of the past few years after a big run up in prices.

With prices now at record highs, some of the heat has come out of the market as the relative value these cities once offered has diminished a little.

Recent research suggests buyer demand, measured by the number of enquiries per listing, has eased in Perth, Adelaide and Brisbane, but strengthened in Darwin, Melbourne and Hobart.

Nonetheless, Brisbane has torn ahead of the pack in the unit market, with prices up 14.1% compared to a year ago.

With Brisbane’s median house price of $1.085 million now the second-highest in the nation after Sydney, more buyers have targeted apartments, which are usually a much more affordable option.

A typical Brisbane unit costs $348,000 less than a typical house – a substantial saving for first-home buyers stretching to get into the market.

Demand ‘re-accelerates’ in Sydney and Melbourne

Sydney recorded the second biggest monthly increase in home values after Darwin, with prices up 0.7% in August. 

Prices rose 3.7% in the past year in Australia’s largest and priciest city, which is a more modest growth rate compared to the more affordable capitals.

A typical Sydney house is worth $1.581 million, while the median unit price has reached $861,000. 

Melbourne home values crept 0.3% higher in August, with the city’s median value now less than 1% below its previous record high.

“Demand has re‑accelerated in Sydney and Melbourne marking a turnaround from the slower conditions observed in late 2024,” Ms Creagh said. 

“Melbourne is closing in on its 2022 peak, with relative affordability and strong population growth restoring its appeal.”

Values have grown slower in Melbourne than in any other capital in the past five years, rising about 19% since 2020.

The national median home price has risen about 50% in that time, while Perth, Adelaide and Brisbane have climbed about 90% since then with median values that have surpassed Melbourne’s.

With relative affordability coaxing buyers back, demand in Melbourne is now on the rise.

Prices in Hobart fell by 0.5%, with the city’s price recovery progressing at a stop-start pace, despite demand ticking up and homes selling a little quicker.

Outside the capitals, price growth has been strongest in regional South Australia and Queensland, with prices growing most rapidly in Townsville and Mackay.

Ms Creagh said it was likely housing markets would remain competitive into spring following the most recent rate cut.

“As we enter spring, conditions point to continued price growth, though the pace will vary across markets.”

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