PropTrack Home Price Index: March 2022
Posted on: 6 Apr 2022

PropTrack Home Price Index: March 2022

"Brisbane continues to be a star performer in property." - Matthew Lapish, Senior Investment Analyst

The new PropTrack Home Price Index reveals that home prices increased in March, despite considerable slowing across the country. South Australia topped price growth in the month with continued momentum in Adelaide.

Regional price growth continues to outpace capital cities over the past year, with regional New South Wales, Queensland and Tasmania the beneficiaries of the trend towards lifestyle locations and larger homes.

PropTrack’s new Home Price Index, launched today, measures the change in residential property prices across Australia, analyses property market trends and provides expert insights on key factors driving the housing market.

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Here are the key highlights from the March 2022 report:

  • Australian home prices increased by 0.34% in March. This is around half the decade-average pace of monthly growth and substantially below the rate of growth this time last year.
  • Monthly price growth was highest in South Australia, with Adelaide the top performer of the capital cities.
  • Prices fell very slightly in Melbourne in March, with larger falls recorded in Perth and the Northern Territory.
  • Regional areas continue to outperform the capitals in the post-pandemic market. Prices have increased 24% in the past year in regional areas, but only 15% in the capitals.
  • Over the past year, growth standouts have been Brisbane, regional Queensland, regional NSW and the Australian Capital Territory.

Home price growth has slowed since late 2021

Housing price growth has slowed considerably in 2022. In March, prices across the country increased at their slowest monthly pace since May 2020, the period just after national lockdowns were lifted.

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In the year to March, national dwelling prices have risen by 18%. Although the peak of price growth is clearly past, 2021 was such an exceptional year for home price growth - the third fastest episode in Australia's history. It would take further exceptional circumstances to match that in 2022.

Regional areas and houses continue to benefit from pandemic-induced preference shifts

Regional areas continued to benefit from relative affordability and preference shifts towards lifestyle locations and larger homes that have followed the pandemic. Prices have increased 25% in the past year in regional areas, but only 16% in the capitals.

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In March, regional areas across all states outperformed their capital city region. The strength in regional areas has been particularly evident in regional NSW, Queensland and Tasmania, where growth has exceeded 24% over the past year.

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These same preference shifts have benefitted house prices across the country. House prices are up 20% over the year with units up only half that amount over the same period.

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Regional NSW and Brisbane feature prominently among highest growth regions

Regional areas also feature prominently in those SA4 regions that have grown the most quickly over the past month and year. Many of these locations are in regional NSW, which is the area with the most price momentum going into 2022.

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Looking across the capitals, the outperformance of peripheral regions is clear. With larger homes, and reduced commuting, these regions have increased in prominence over the post-pandemic period.

Looking across the capitals, the outperformance of peripheral regions is clear. With larger homes, and reduced commuting, these regions have increased in prominence over the post-pandemic period.

Outlook

The housing market has experienced exceptionally strong growth since mid-2020. This has been fuelled by historic low borrowing costs, unprecedented preference shifts and low volumes of available stock.

The slowing in price growth in late 2021 and 2022 so far has chiefly reflected the reduced influence of lower interest rates on the market. Mortgage rates have already started to increase, in particular those for fixed-rate loans, which has already started to weigh on home price growth. The average rate paid on new owner occupier loans is now 2.5%, representing the first increases in several years. Further - larger - increases in borrowing rates are predicted when the RBA increases the cash rate, widely expected later in 2022.

Price growth in regional markets has been stronger than in capital cities for some time, and we expect that to continue, at least for the first half of 2022. The lure of regional Australia remains strong, with property prices still in most instances significantly lower than the cities, despite recent price increases. But the attraction may wane somewhat as 2022 hopefully marks an uninterrupted year for city lifestyles, and the benefits of denser living areas returns.

The return of investors is the other story we expect to continue in 2022. The return of immigration will rejuvenate a key source of rental demand for landlords, particularly in inner-city regions. Preference shifts since the pandemic have also made both inner city locations and apartments relatively cheap, which comprise the types of homes investors often prefer.

But overall the outlook for price growth remains subdued. As prices have caught up to lower borrowing costs, further gains rely on income growth, which has remained moderate across the country for several years now. This will be balanced by the timing and speed of interest rate increases, which remains the biggest unknown in the housing market for 2022.

* The PropTrack Home Price Index measures the monthly change in residential property prices across Australia to provide a current view on property market performance and trends. PropTrack Home Price Index uses a hybrid methodology combining repeat sales with hedonic regression. The repeat sales method matches resales of the same property while the hedonic regression estimates values based on the value of similar properties. The hybrid model allows two properties in the same Australian Bureau of Statistics Statistical Area 1 (SA1) region, of the same type, to be matched and controls for differences in property characteristics, as in a hedonic regression. The PropTrack Home Price Index is a revisionary index with the whole back history updated monthly with current transaction information.

** This report uses realestate.com.au internal data and data sourced from third parties, including State government agencies. It is current as at the time of publication. This report provides general information only and is not intended to constitute any advice and should not be relied upon as doing so. If you wish to cite or refer to this report (or any findings or data contained in it) in any publication, please refer to the report as the ’PropTrack Home Price Index Report – March 2022’. See full report for Copyright and Legal Disclaimers.

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Source: Realestate.com.au

Ryan, P. (2022, March 31). PropTrack home price index: March 2022. Search for Real Estate, Property & Homes - realestate.com.au. https://www.realestate.com.au/insights/proptrack-home-price-index-march-2022/