Tim Lawless, Research Director at CoreLogic, pointed out that despite facing challenges such as high interest rates, rising living costs, affordability issues, and subdued consumer sentiment, the demand for real estate remains quite resilient. He further noted that population growth has reached its highest level since the 1950s, while new housing approvals have been declining, leading to a significant imbalance between supply and demand. This imbalance does not appear to be resolved quickly, thus continuing to drive up house prices.

In all state capitals except Melbourne, house prices rose in the third quarter. Sydney remains the most expensive city, while Perth, Adelaide, and Brisbane have also hit historic highs after sharp increases last year. It is noteworthy that the Reserve Bank of Australia has raised interest rates 13 times since May 2022, leading to a sharp increase in mortgage repayments, especially for households that applied for loans during the pandemic when cash rates hit a historic low of 0.1%.

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However, despite the increase in interest rates leading to increased pressure on loans, the mortgage default rate has only slightly increased so far and remains below pre-pandemic levels. This situation is maintained mainly due to the unemployment rate remaining near half-century lows and the prospect of interest rates beginning to fall later this year. For example, sales volume increased by 9.5% compared to the March quarter of 2023. CoreLogic indicates that turnover at this time of year is about 3.7% higher than the average level of the past decade.

Despite the continuous rise in house prices, there are also signs in the market indicating affordability pressures. One such sign is a gradual shift in demand towards cheaper markets. In the past three months, the lowest quartile of house prices has risen by 3.1%, while the highest 25% of house prices in the market have only increased by 0.7%.