Property prices have surged in several markets since the Reserve Bank of Australia’s first interest rate cut in February, with inner Melbourne emerging as the surprising frontrunner for both house and unit growth.
According to PropTrack data, inner Melbourne house prices have risen 3.6 per cent since February, while unit prices have jumped an impressive 5.9 per cent. This marks the fastest quarterly price growth for both houses and units compared to any other local property market in Australia.
Darwin has also experienced significant growth with house prices up 3.3 per cent over the past three months, following years of underperformance. The Gold Coast rounds out the top performers with house prices increasing nearly 3 per cent.
REA Group senior economist Anne Flaherty said Melbourne’s relative affordability after years of price stagnation has attracted more buyers to the market.
“Home prices have underperformed the rest of the country so much and are now cheaper than Brisbane, Adelaide and on track to be cheaper than Perth,” she said. “That’s driving a lot of people to see value on the Melbourne market.”
The interest rate cut in February has been a turning point for the property market, boosting buyer confidence and reigniting price growth across the country. Some regions have seen prices jump by up to 6 per cent in just three months.
Buyer sentiment towards Melbourne’s property market has been building, with REA Group’s most recent Residential Audience Pulse survey finding 40 per cent of Victorian buyers felt it was a good time to buy a property – a higher proportion than any other state.
“We’ve seen a really strong turnaround in how buyers view Melbourne,” Ms Flaherty said.
For annual growth, Queensland regions dominate the rankings, with Townsville leading the way. House prices there have grown by almost 22 per cent compared to a year ago, while unit prices are up 23.6 per cent.
The Northern Territory capital was also attracting investors due to the potential for strong rental returns, with higher rental yields than any other capital.
“From an investing perspective, Darwin offers very high yields,” Ms Flaherty said. “The median price of home in Darwin is relatively low but the rents are relatively high.”
Ms Flaherty said that while Townsville has been the best performing region over the past 12 months, its growth rate has slowed recently, indicating a shift in investor focus. “We’ve seen the bottom of the market and talks of further rate cuts are starting to get people thinking that in 12 months’ time it’s going to be worth more.”