Aussie cities where house prices are booming again despite 13 interest rate rises – and they’re not Sydney or Melbourne

More affordable Australian cities outside Sydney and Melbourne, which are attracting new residents from interstate rather than overseas, have seen the strongest increases in house prices.

Perth is no longer Australia’s most affordable state capital, with the average house price rising 17 per cent to $708,335 in the year to January, CoreLogic data published on Thursday showed.

In January alone, house prices rose 1.6 percent, led by research director CoreLogic Tim Lawless describes Perth as a country that stands out for its continued high pace of capital gains.

Prices in the Western Australian capital are now at a record high, after peaking in 2014 following the last mining boom, before stagnating for years.

The median price in Perth is still buying something with a backyard less than 10km from the city center in an inner-city suburb like East Victoria Park.

“The western capital continues to see demand for housing exceeding supply,” Lawless said.

In the satellite city of Mandurah, south of Perth, property values ​​have risen 21.2 per cent in the past year to $596,579.

This came as the average house price in Brisbane rose 15 per cent to $888,628.

In the southern suburbs, which stretch from Annerley town center to Stretton, house prices rose 20.7 per cent to $1,053,461.

Both Perth and Brisbane are growing due to interstate migration, while new overseas arrivals are flocking to Sydney and Melbourne.

These provincial capitals saw the biggest increases in house prices, even as the Reserve Bank raised interest rates for the thirteenth time in eighteen months in November to a twelve-year high of 4.35 percent.

Property values ​​in Australia’s state capitals are rising despite the most aggressive interest rates since 1989 due to rapid population growth.

Sydney, Australia’s most expensive capital, saw the average house price rise 12.8 percent over the year to $1,395,218.

This came after a record 518,000 net migrants, on a net basis, moved to Australia during the last financial year.

Sydney has Australia’s largest influx of new overseas residents, but also the largest exodus to other states.

Cities with colder climates experienced weaker real estate price growth.

Melbourne, another major recipient of new foreign arrivals, saw its average house price rise by just under 4.3 percent over the year to $942,750.

This happened as the house price in central Brisbane rose 15 per cent to $888,628 (pictured is a house in Coopers Plains)

Hobart is now Australia’s most affordable capital, with the average house price down 0.5 per cent over the year to $692,619.

However, Adelaide saw a double-digit increase, with the average house price rising 10.2 per cent to $774,969.

Canberra, Australia’s second most expensive capital, saw the average house price rise by a more modest 1.9 percent per year to $968,248.

Darwin remains Australia’s cheapest capital, with the Northern Territory capital’s average house price rising just 0.3 per cent to $578,342.

AMP senior economist Shane Oliver said a lack of supply would see Australian house prices continue to grow in 2024, but at a slower pace.

“Our base case remains for softer house prices this year, but the housing shortage and increasing confidence in rate cuts could keep average house price increases modestly positive,” he said.

But with inflation falling to a two-year low of 4.1 per cent last year, Dr Oliver said rate cuts from the Reserve Bank of Australia in late 2024 could see prices start rising again at a rapid pace.

“Expect a revival later this year in response to lower mortgage rates,” he said.

‘Falling inflation increases confidence that rates will fall from the middle of this year, but bear in mind that RBA communications are likely to remain cautious on inflation and interest rates for some time to come.’