House prices in Victoria fell in the June quarter as rising interest rates affected the market, according to Capspace, a private credit investment manager.
In contrast, Western Australia, South Australia, and Queensland saw strong house price growth, overtaking New South Wales in terms of increases.
Data from ABS revealed the national average price of residential dwellings rose by 1.6%, reaching $973,300.
NSW remains the most expensive state with a mean dwelling price of $1,222,000, while Victoria’s average dropped to $900,300 from $906,900.
The biggest growth was in Western Australia, where prices surged by 6.2%, followed by South Australia (4.2%), and Queensland (3.6%).
Capspace managing director Tim Keith (pictured above) cited rising construction costs and a slowdown in residential construction since 2021 as key factors driving up property prices in most cities.
“Building approvals are simply not keeping up with demand, and as a result, property prices in most capital cities are expected to rise over the next two years,” Keith said.
While Melbourne’s property market may continue to show weakness due to higher interest rates, Keith suggests this could create opportunities for new buyers.
“This could present an entry point for new homebuyers, as affordability rises,” he said.
Research from Performance Property for Capspace forecasts robust growth for Perth, where house prices are expected to rise by 25% in the medium term, reaching over $900,000.
Brisbane may see a 20% increase, with prices hitting $1,000,000, while Adelaide could experience 10% growth before peaking.
Despite the rise in property prices, Keith advised investors to diversify their portfolios.
“Many Australians are vulnerable to a correction in the property market, especially if the economy slows and unemployment rises,” he said.
Keith recommended private credit investments, which offer yields close to 10% and greater capital protection than property investments.
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