Albanese concedes new scheme will inflate prices as new report shows upswing already accelerating
Australian home values are rising at their fastest pace in almost two years, with new figures from Cotality showing the market gathering strength through September. The surge comes as the federal government expands its First Home Buyer Guarantee, a policy Prime Minister Anthony Albanese (pictured) admits will add further pressure to prices.
The Cotality Home Value Index recorded a national rise of 0.8% last month, the strongest since October 2023. Values climbed 2.2% over the September quarter, lifting the national median by about $18,000 to $857,280. All capitals and regions posted growth over the month, quarter and year.
Brisbane, Perth and Darwin led the charge with quarterly gains of 3.5, 4 and 5.9% respectively. Sydney prices rose 0.8% in September, while Melbourne edged up 0.5%.
Cotality research director Tim Lawless said the supply side remains the key driver. “The number of homes for sale at the end of September was about 53% lower than average in Darwin, 45% below average in Perth and down 31% in Brisbane,” he said.
Sales activity, by contrast, was running above average, underscoring the gulf between demand and availability.
Borrowing capacity driving demand
Growth is no longer confined to cheaper stock. Gains are now spreading into the middle of the market, helped by stronger borrowing capacity after recent interest rate cuts.
Across the capitals, lower quartile values rose 2.6% over the quarter, the middle tier lifted 2.7% and the upper quartile gained 1.8%. Clearance rates have also firmed, hovering around 70% since August compared with closer to 63% earlier in the year.
The government’s widened deposit guarantee, which now removes income limits and lifts property caps, will add to that competitive environment.
Albanese argued the impact on prices would be marginal. “But what it will do is to allow more young people to get into homeownership and this is just one of the measures we are dealing with supply,” he said.
For mortgage brokers, the convergence of strong price momentum and expanded demand-side support means we can expect more first-home buyers entering markets that are already straining.
Affordability, as ever, remains a hurdle. The national dwelling value-to-income ratio is near record highs at 7.9, with Sydney pushing towards 9.6.
As the spring selling season intensifies, the tension between elevated demand, restricted supply and household budgets is likely to dominate the months ahead.
