In October, Australian home prices continued their impressive rise for the ninth consecutive month. Despite concerns about rising interest rates, inflation, and the cost of living, the property market in Australia seems unstoppable.

Three major Australian cities have experienced significant increases in house prices in the first ten months of 2023:

1. Sydney - 10.9% increase

2. Perth - 10.8% increase

3. Brisbane - 10.2% increase

According to CoreLogic's research director Tim Lawless, the national home values are expected to reach a new record high by mid-November, bouncing back from a 7.5% drop recorded between May 2022 and January 2023.

Economists describe this property price turnaround since February as "quite remarkable." Even with the Reserve Bank of Australia (RBA) raising interest rates by 400 basis points since May 2022, property prices have recovered to their pre-tightening cycle peak in April 2022.

They are also noting that the usual relationship between new lending and home prices has broken down due to housing affordability deteriorating significantly.

One significant factor contributing to the housing market's resilience is the surge in Australia's population growth over the past year, which has outpaced home construction. This has led to record-low vacancy rates and a hot rental market, putting upward pressure on home prices. Additionally, foreign buyers are increasingly active in the market.

Despite the consistent rise in housing values across most capital cities, the quarterly pace of growth has slowed down. Higher advertised stock levels and stretched affordability have contributed to this slowdown.

Looking ahead, experts are forecasting a 25-basis point rate increase at the November RBA Board meeting, which would take the cash rate to 4.35%. While this might affect near-term sentiment in the housing market, strong demand for housing is expected to continue due to constrained supply and robust rental growth.

Aussie households remain optimistic about the continued increase in home prices, as indicated by rising indices, and this positive sentiment is likely to influence the housing market's performance in the coming months.