House prices in Sydney have risen for a sixth straight month, despite an increase in interest rates due to record high immigration.
In Australia’s most expensive capital, the median value rose another one percent in July to an even more prohibitive $1,333,985, data from CoreLogic showed.
House prices in Sydney have risen every month since February, even as the Reserve Bank has raised interest rates 12 times since May 2022 to an 11-year high of 4.1 per cent.
The recovery started earlier in Sydney, which is receiving a higher proportion of new migrants and the Treasury Department expects a record 400,000 permanent and long-term arrivals for 2022-23.
House prices in Sydney have risen for a sixth consecutive month, despite a rise in interest rates due to record high immigration (pictured is an auction in Hurlstone Park)
House prices started to rise again in March in other major capitals.
House prices in Melbourne have been rising for five consecutive months, rising a further 0.3 percent to $923,881 in July.
In Brisbane, house prices rose a further 1.4 percent to $819,832 last month.
Perth’s values rose by one percent to $625,969.
Adelaide’s recovery began in April, but monthly increases have since been bigger with prices in July rising another 1.4 percent to $722,793.
Darwin prices rose for the third straight month in July, rising 0.5 percent to $583,913.
But prices fell in the small capitals that do not receive a large influx of new migrants, with prices in Hobart falling 0.1 percent to $696,570 in July, while prices in Canberra fell 0.3 percent to $958,950.
The futures market expects the Reserve Bank of Australia to leave rates unchanged for a second month in a row in August, with an increase on Tuesday viewed as a 14 percent chance.
Even with a pause, Australian borrowers have endured the most aggressive rate hikes since 1989.
AMP chief economist Shane Oliver said immigration was fueling a housing price recovery.
In Australia’s most expensive capital, the median value jumped another one percent to an even more prohibitive $1,333,985 in July, CoreLogic data showed (pictured are commuters on a Wynyard station train)
“The recovery in prices since February this year reflects a widening shortfall in supply relative to underlying housing demand,” he said.
“Immigration is soaring and is likely to exceed 400,000 this year, fueling the fastest population growth in 15 years, as the supply of new housing shrinks.
This, in turn, accentuated very tight rental markets, forcing up rents and driving tenants to consider buying sooner than they otherwise would have done.
“At the same time, foreign demand is returning.”
While some buyers feared missing out – known as FOMO – Dr. Oliver said that could loosen if rate hikes triggered a recession.
“If the economy were to slide into recession, the government would likely reduce immigration intake, further reducing the underlying imbalance between supply and demand,” he said.
CoreLogic research director Tim Lawless said national home values were 5.3 percent below their April 2022 peak, but price records were set in Perth, Adelaide and regional South Australia.
Price drops in late 2022 and early 2023 had encouraged investors, renters, and some first home buyers.
“These segments tend to be more active in the mid to lower end of the price range, where competition to buy a home can be more intense,” he said.