AUSTRALIA’S capital city house prices have experienced its greatest quarterly increase in 18-years, which is emboldening sellers to lift asking prices.
According to Domain’s latest Asking Price Edits report, the combined capital city median house price increased by $539 every day over the first three months of the year.
For Sydney and Canberra, the past three months represents the fasted quarterly acceleration in almost three decades, increasing by $1145 and $909 a day respectively.
As a result, sellers have been increasingly raising asking prices mid-campaign, to match the accruing capital growth experienced over a four-week sales period.
In Sydney and Canberra this accruing capital growth would add a respective $32,060 and $25,452 over the four-week campaign.
Likewise in Melbourne where house prices rose $499 a day over the first quarter, this would represent an additional $13,972.
Dr Nicola Powell, senior research analyst at Domain, said the housing market is clearly not static.
“For buyers, purchasing can become challenging during a period of significant momentum, as competition and prices move quickly, which has been seen to date in 2021. For sellers, receiving a quick or multiple offer(s), especially if above the asking price, can indicate strong levels of competition and be a sign the market has moved upwards from the initial asking price.
“The more expensive areas of Sydney and Melbourne have the highest percentage of asking price revisions upwards over April. This suggests the upper end of the market will continue to lead price growth in the coming months,” Powell added.
Though the trend for increasing asking prices mid-campaign began to level out across most capital cities in April.
At its peak in Sydney, almost 10% of sale listings saw an upwards revision of the asking price over March, dropping to 9.3% in April.
In Sydney mid-campaign increases were most prevalent in the Eastern Suburbs, at 14%, followed by Sutherland at 12.7% and the Inner West at 12.1%.
In Melbourne it peaked this year in March at 8.9%, compared to March 2020’s near 10%, before dropping to 7.8% in April.
Mid-campaign increases in Melbourne were seen most significantly in the Inner South at 11.4%, Inner at 9.1% and Inner East and North East both at 8.7%.
While Darwin was the only capital city to hold at its peak into April at 5.7%.
Due to greater price volatility in capital city housing markets, this trend has been less pronounced amongst regional markets.
Market conditions, including elevated levels of demand and competition amongst buyers have enabled sellers to successfully increase prices mid-campaign.
Powell said while these mid-campaign price hikes will lead inevitably to annual price dwelling growth, it is forecasted that will mean a one-month lag between revised asking prices and price growth.
“When we see more homes for sale with the advertised asking price revised higher during the sales campaign, it provides an on-the-ground lens of buyer sentiment and level of market competition. It is intuitive that this would then translate into a change in pace of property price growth,” she continued.
“This data set suggests that prices will continue to grow in the coming months. However, the fast pace of price growth recorded early 2021 is likely to be less steep, supported by the fact most capital cities are now easing from a recent peak in asking prices being raised.” Powell concluded.