At the beginning of the year, economists predicted a continued decline in Australian house prices, estimating a total decline of approximately 15% to 20% due to rising interest rates. However, contrary to expectations, house prices quickly found support and even reached new highs in some cities.

According to data from CoreLogic, as of November, house prices in Sydney surged by 10.2%, while median prices in Brisbane and Perth rose by 10.7% and 13.5%, respectively, reaching historic highs. Adelaide also witnessed a 7.6% increase in house prices, and Melbourne experienced a 3% rise.

The reversal of this trend has left people perplexed, as typically, with the increase in cash rates, house prices tend to fall due to reduced borrowing and spending capacity of buyers. However, strong international immigration and a fiercely competitive rental market have bolstered buyer demand, sustaining market vitality.

International immigration has played a crucial role in driving demand in the property market. As Australia gradually opens its borders, many international immigrants opt to purchase properties, contributing to increased demand in the market. These immigrants bring new purchasing incentives, prompting the rise in house prices.

Furthermore, the fiercely competitive rental market is another factor contributing to the increase in house prices. With a shortage of supply in the rental market, many individuals are turning to homeownership, further fueling the growth in house prices.

In addition to the impact of international immigration and the rental market, some buyers are less affected by the rise in interest rates. These buyers may include those supported by their parents or those with significant existing assets or substantial savings accumulated during the pandemic lockdown. Their demand for housing has also played a role in driving market activity.

Moreover, the reduced number of homes for sale in the market at the beginning of the year, as sellers were concerned about a softening market, intensified competition for existing homes, contributing to the surge in house prices.

In Melbourne, despite the interest rate hike, the market has remained relatively stable throughout the year, with consistently low numbers of properties available for sale. Additionally, the increase in land taxes in many areas of Melbourne has stimulated investors to sell properties, providing opportunities for owner-occupiers, including first-time buyers.