House prices rose in almost every capital city during the June quarter, but apartment prices fell, as construction boosted supply, while the slowdown in the resources sector hit demand. 

Around the country, the median house price increased 1.5% over the quarter, with strong growth in Sydney, Melbourne, Brisbane, Adelaide, Canberra and Hobart, according to the June Quarter Domain House Price Report. But steep falls continued in Perth and Darwin, where prices fell 1.7% and 0.7% respectively.

The median unit price for the country increased, but record levels of apartment construction have led to oversupply in some capital cities.

Median house prices hit record highs in Melbourne, Adelaide and Canberra, while solid gains were recorded in Sydney, Brisbane, and Hobart.

The median house price in Sydney has ticked back over the psychologically important $1 million mark, at $1,021,968, having gained 2.4% over the quarter.

But it appears the strongest gains are over for Sydney’s exuberant property market. The harbour city’s median house price is still lower than the $1,032,899 recorded in September 2015, and prices rose only 1.2% for the year – the lowest annual increase in four years.

Sydney unit prices increased 0.6% to $669,830 over the quarter, an annual increase of 0.4%, the lowest annual growth since December 2011.

Domain Chief Economist, Dr Andrew Wilson, said, “Last quarter, Sydney house prices dropped below $1 million, but they have bounced back as lower interest rates boost market confidence. The current growth rates are significantly lower than the rises during Sydney’s property boom but, with the revival of investor activity, it’s likely there are more increases coming for the capital.”

Melbourne median house prices hit a record high of $740,995, having gained 1.5%. Melbourne house prices have increased for twelve consecutive quarters and grown an impressive 7.4% over the past year.

Melbourne unit prices rose to $450,933, achieving quarterly growth of 3.5%, and an annual increase of 2.7%.

The Brisbane median house price rose 1.2% to $521,915 over the June quarter. Annually, prices were up 4.3%.

Unit prices continued to fall in Brisbane, slipping 1.8% to $370,251, making an annual decline of 3.2%.

“The eighth consecutive quarter of median unit price falls clearly suggests that oversupply and weak demand continue to impact the market,” said Dr Wilson.

Median house prices in Adelaide hit a record high of $498,927, a 0.9% gain for the quarter, and a 4.4% gain for the year. Adelaide’s median unit prices continued to fall, easing 1.7% to $294,165 over the quarter. The median unit price gains 0.1% for the year.

“The recent surge of new apartment construction has left the local market sluggish, surpassing the demand from buyers,” said Dr Wilson.

Perth median house prices continued their downward trajectory in the June quarter, falling 1.7% to $568,132, marking the sixth consecutive quarter of price falls. The median price is now at the lowest point since March 2013. In the last 12 months, Perth house prices have fallen by 5.6%. Perth median unit prices fell 2.4% during the quarter to $367,025, a 7.8$ fall for the year.

“Perth is feeling the price shock brought on by a surplus of newly constructed apartment buildings that exceeded buyer demand. Coupled with steep annual falls in house prices, the capital is a long way away from returning to a healthy market,” said Dr Wilson.

Median house prices in Hobart inched 0.3% higher over the quarter to $345,880. Hobart house prices were up 2.6% for the year, but Hobart is still the most affordable capital in Australia. Hobart apartment prices bucked the trend across the nation, rising 2.5% over the quarter to $276,312, and were up an impressive 10.4% for the year.

“With lower interest rates stimulating investor activity, it’s likely we’ll see prices continue to climb,“ said Dr Wilson.

The median house price in Canberra increased to a record $654,306, over the June quarter, making a 3.1% gain for the quarter, and a 4.8% gain for the year.

Canberra median unit prices fell 1.6% to $399,505, and 4.4% over the year. Canberra unit prices are now at their lowest since December 2009.

Darwin’s median house price fell for the fourth consecutive quarter, dropping by 0.7% to $613,590, a decline of 7.7% for the year.

Median unit prices in Darwin saw no change over the June quarter, and a marginal decrease of 1.5% over the past year.  

“Darwin prices have continued to decrease as demand from resource industry workers dwindles in line with the downturn of the mining economy,” said Dr Wilson.

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