Australia’s property market has hit a new record, with the total value of residential real estate reaching $11 trillion for the first time. This is an increase of $900 billion over the past year, according to CoreLogic’s October Monthly Housing Chart Pack.
Australian property market hits $11 trillion; growth slows,
Despite the overall growth, national home values increased by only 1.0% in the September quarter, the smallest rise since March 2023.
The annual growth rate has also slowed to 6.7%, down from a high of 9.7% earlier this year, indicating a cooling market.
CoreLogic Australia Economist Kaytlin Ezzy attributed the slowdown in price growth to higher listing volumes and more cautious buyer behavior.
Recent figures show that Perth values reached a new record high, experiencing the highest annual growth of 24.1%.
This growth is driven by sustained demand and limited supply, showcasing strong interest in the Perth market.
Sydney, Brisbane, and Adelaide also reached record highs in dwelling values, reflecting the ongoing demand in these cities.
Brisbane recorded an annual increase of 14.5%, while Adelaide values rose by 14.8% in the 12 months to September.
In contrast, Sydney values increased by only 4.5% during the same period, showing a more moderate growth rate.
However, Melbourne and Hobart experienced declines in both quarterly and annual dwelling values, falling by -5.1% and -12.5%.
These declines are below their record highs recorded in March 2022, indicating weakening markets in those cities.
Regional housing markets saw a quarterly increase of 1.0%, down from 2.3% in the three months to April.
This deceleration mirrors the trend observed in the capital cities, suggesting a broader cooling effect across the market.
“While the market remains resilient in many areas, the pace of growth has clearly slowed,” Ms. Ezzy noted.
She added that buyers and investors are becoming more cautious due to the current lending environment.
The increase in new listing volumes has also impacted values, rising by 2.1% year-on-year as of October 6th.
This marks the strongest start to the spring selling season since 2021, contributing to changing market dynamics.
Total sales volumes have slightly declined compared to the previous 12 months, but activity remains 10.5% higher than last year.
“The year-on-year increase in new listings contributes to the slowing value growth as the market absorbs additional stock,” Ms. Ezzy explained.
Despite changing conditions, the higher rate of sales indicates solid buyer demand still exists in the market.
“As we move through spring, we may see further moderation in value growth due to rising new listings,” she added.
This will provide some relief for buyers who faced intense competition over the past year in the market.
Investors represent a significant portion of the strong buyer demand, making up 38.6% of new loan commitments.
This is the highest share of investor activity since 2017, indicating renewed interest in property investment.
Meanwhile, national rental growth has slowed, with rents rising only 0.1% over the quarter, the lowest in four years.
Gross rental yields have decreased to 3.68%, down from 4.1% a year ago, showing affordability constraints for tenants.
Ms. Ezzy suggested that high investor activity is likely due to perceived opportunities for capital gains and tighter rental market conditions.
“Along with capital gains, some investors see potential for long-term rental income growth, despite lower rental yields,” she stated.
The increase in available stock also provides more opportunities for investors to enter the market compared to last year.
However, this trend could intensify competition for other buyer groups, such as first-home buyers still active in the market.
Increased investor activity might place further pressure on already limited supply levels, especially in capital cities.
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Key points from the October 2024 Housing Chart Pack include:
- CoreLogic estimates that the total value of residential real estate reached $11 trillion by the end of September.
- National home values increased by only 1.0% during the September quarter, marking the lowest quarterly rise since March 2023.
- Currently, dwelling values in Sydney, Brisbane, Adelaide, and Perth are all at record highs.
- Perth recorded the highest increases in dwelling values for the month, quarter, and year, while Adelaide has now surpassed Brisbane as the second strongest capital city market.
- CoreLogic estimates that there were 522,317 sales in the 12 months leading up to September, a slight decrease from 524,442 in the year to August.
- Despite this month-on-month decline, transactions are 10.5% higher than last year and 6.5% above the five-year average.
- The average days on market increased to 32 days in the three months to September, up from a low of 29 days in Q2.
- Longer selling times in Hobart (52 days), Darwin (49 days), and Canberra (45 days) contributed to this increase.
- Vendor discounting remained stable at -3.7%, reflecting current market conditions and the need for negotiation to secure sales.
- New listings totaled 42,479, which is 2.1% higher than the same period last year and 8.2% above the five-year average.
- This represents the highest level of new listings in the first month of spring since 2021.
- The recent influx of new listings has pushed total listings to 145,450 in the four weeks ending October 6, 2024.
- Sydney (3.7%), Brisbane (12.1%), and Perth (9.4%) all experienced a stronger flow of new listings compared to the same time last year.
- Total listings in Brisbane are now 4.2% higher than last year, while advertised supply in Sydney and Melbourne is up by 6.9% and 7.9%, respectively.
- Capital cities recorded their lowest clearance rate of the year at 60.6% in late September, below the 10-year average of 65.5%.
- Annual growth in rental values slowed to 6.8% nationally, down from a recent high of 8.5% for the year ending in April.
