After two years of downward trends, sales figures, mortgage approvals and construction starts have begun to turn the corner with Melbourne and Sydney leading a strong rebound.
According to Domain Group's latest house price report, Sydney house prices have regained nearly one-third of their losses suffered in the downturn of the past two years which saw prices slump by 15 per cent, while house prices in Melbourne have seen a similar lift regaining almost half of the price falls that occurred during the steepest downturn in more than two decades.
House prices in the country's two biggest cities jumped 4.8 per cent and 4.1 per cent respectively over the September quarter with many dormant buyers trying to take advantage of lower prices.
The national median house price increased more than $20,000, or 2.7 per cent, to a median of $753,556 over the past three months.
|City||Houses||Houses Median Price||Units||Units Median Price|
In Sydney, house prices are now 9.9 per cent below the mid-2017 peak, and units prices 10.6 per cent below.
Every pocket of Sydney recorded an increase in house prices in the past quarter except for Sydney’s upper north shore, which dropped 0.3 per cent to a median of $1.62 million.
Domain senior research analyst Nicola Powell said it was the first national quarterly growth Australia had seen since December 2017.
“The ability to service a mortgage has fallen, prices are still below their peak and we have seen a subtle relaxation of lending.”
“All of these factors together is helping drive that recovery.”
Melbourne’s recovery follows a sharp fall in median house prices from the peak in December 2017 to the trough in March, a fall of $94,391.
The inner-east neighbourhood of Armadale was up 5.7 per cent over the 12 months to September to a median of $1.95 million while inner-city Flemington rose 4.9 per cent to $970,000.
House prices also spiked in Ballarat and Bendigo by 9.7 per cent and 5.9 per cent, respectively.
As for units, the family stronghold of Blackburn had the largest rise in unit medians with a lift of 19.9 per cent to $581,000 while the suburb of Clayton similarly lifted by 17.9 per cent to $577,500.
Hobart and Darwin's housing markets experienced more moderate growth of 1.3 per cent and 1 per cent according to Domain Group's latest house price report.
Brisbane, Canberra and Adelaide all recorded falls in both house and unit prices over the quarter.
Apartment prices fell by 5.2 per cent in Adelaide, 4.4 per cent in Canberra, 3.4 per cent in Brisbane and 3.3 per cent in Darwin.
While prices have seen mixed improvements across the country, sellers have not responded to the improvements in Sydney and Melbourne.
The number of new listings added to the market in the first month of spring was 13 per cent lower than a year ago, and well below the spring surge of the previous five years, according to CoreLogic.
Nationally the number of homes on the market is 13 per cent less than a year ago.
In Sydney, the number of homes for sale at the beginning of October was 20 per cent down on a year ago.
While record low interest rates and loosening in credit standards have served to breathe life into a struggling housing market the Coalition government has moved to remove more barriers to entry by coming good on its first-homebuyer deposit scheme election promise.
Under the scheme, which stands to benefit up to 10,000 Australians each year, the government will provide a guarantee to borrowers earning less than $125,000 a year who have a deposit of between 5 and 20 per cent of the property's price.
The government has also announced price caps for support through the scheme, which is $700,000 for a house in Sydney and $600,000 in Melbourne.
First homebuyers will only have to save 5 per cent of a deposit under the plan, with the federal government to guarantee the difference of a standard down payment.