By Michael Yardney August 19, 2024

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This week’s Australian Property Market Update – Latest Data, State by State August 20th 2024

Property Market News
This week’s Australian Property Market Update – Latest Data, State by State August 20th 2024

Key takeaways

Our property markets are continuing to rise, but more slowly than earlier in the year.

CoreLogic estimates the combined value of residential real estate rose to $10.9 trillion at the end of July. I remember when it hit $9 trillion before the pandemic and everyone was excited.

The volume of auctions didn’t quite reach the 2,000 mark last weekend, with 1,995 homes taken under the hammer. This was the largest volume of auctions held in a week since the last week of June (2,030) and up 5.5% on the previous week’s volume of auctions.

The preliminary clearance rate nudged a little higher relative to the previous week, coming in at 70.7% across the combined capitals last week, compared with 70.4% the week prior (revised down to 63.5% once finalised).

The rise in the preliminary clearance rate was mostly driven by Sydney, where 74.6% of auctions were successful so far, up from 68.0% the week prior (revised to 61.2% on final numbers).

This week, CoreLogic Research reports that:

Sydney property prices increased 0.1% over the last week, increased 0.2% over the last month and are 5.5% higher than they were 12 months ago.

Melbourne property prices fell -0.1% over the last week, fell -0.4% over the last month, and are -0.3% lower compared to 12 months ago.

Brisbane property prices increased by 0.2% over the last week, increased 1.0% over the last month and are 15.8% higher than they were 12 months ago.

Overall, Australian capital dwelling prices increased by 0.5% over the last month and are now 8.0% higher than they were 12 months ago.

And it's likely property prices and rents are going to keep increasing throughout 2024.

This current property cycle has been driven by an undersupply of good properties relative to current demand pushing up property values and rents there was nothing to suggest there will be any significant change in the near future.

Unfortunately, the undersupply properties is going to persist for some time with all commentators that there is no way we're going to hit the housing targets required to meet our demand.

Most property investors would give their double garage to know when interest rates are going to fall.

At the beginning of the year there was an expectation that rates would start to drop by the middle of the year, and only a few months ago most economists believed rates would start falling at the end of the year.

But now it seems we are going to have to wait longer - probably till the first half of 2025.

Recently RBA governor Michele Bullock said she still needs to be “vigilant” about the need to curb inflation.

Her forecasts suggest inflation will return to the bank’s target band (2-3%) by the end of next year.

Bullock warned that Australians are still spending too much for her to be certain inflation would come down.

The Governor acknowledged that the money market is factoring interest rate falls saying:

“The market path at the moment is pricing in interest rate reductions by the end of this year.

I think the board’s feeling is that the near term – by the end of the year and the next six months – given what the board knows at the moment and given what their forecasts are, that that doesn’t align with their thinking about interest rate reductions.”

If you’ve been keeping track of things, you’d know that it’s quite common for interest rates to change (both up and down) on Melbourne Cup day - the first Tuesday of November, but Ms Bullock ruled that out saying:

“The judgment of the board was that keeping the interest rate where it is and making sure that people understand that a rate cut is not on the agenda in the near term, given what we know that continued pressure will help to keep demand coming back into line with supply.”

Currently Australia's biggest lender, the CBA, is the only bank that believes interest rates will fall in November.

Wesptac is assessing its forecasts , having previously also forecast an interest rate fall in November.

ANZ bank believe interest rates will fall in February and the National Australia Bank is a little more pessimistic forecasting that rates won't start falling till May 2025.

Either way, the limited supply of properties relative to demand will continue to underpin property price and rental growth, with the latest housing approval figures suggesting that we are going to be building fewer properties than required to meet demand, let alone make up for the current shortfall.

This week, CoreLogic reports that:

Sydney property prices increased 0.1% over the last week, increased 0.2% over the last month and are 5.5% higher than they were 12 months ago.
Melbourne property prices fell -0.1% over the last week, fell -0.4% over the last month, and are -0.3% lower compared to 12 months ago.

Brisbane property prices increased by 0.2% over the last week, increased 1.0% over the last month and are 15.8% higher than they were 12 months ago.

Overall, Australian capital dwelling prices increased by 0.5% over the last month and are now 8.0% higher than they were 12 months ago.

The preliminary auction clearance rate nudged a little higher over the weekend, coming in at 70.7% across the combined capitals last week, compared with 70.4% the week prior (revised down to 63.5% once finalised).

The rise in the preliminary clearance rate was mostly driven by Sydney, where 74.6% of auctions were successful so far, up from 68.0% the week prior (revised to 61.2% on final numbers). See the full Corelogic auction report below.

Clearly, the property cycle is moving on but our markets are very fragmented.

Source: CoreLogic August 19th 2024

Of course, these are "overall" figures - there is not one Sydney or Melbourne or Brisbane property market.

And various segments of each market are performing differently.

At the beginning of this cycle the upper quartile of the market lead the upswing but now the lower quartile across every capital city has recorded a stronger outcome for housing values relative to its upper quartile counterpart over the past quarter.

The following chart shows how various segments of each capital city market are performing differently with median-priced properties performing well.

To help keep you up-to-date with all that's happening in property, here is my updated weekly analysis of data and charts as of 19th August 2024 provided by CoreLogic, and realestate.com.au.

Preliminary clearance rate nudges higher week-on-week

Remember... Auction clearance rates are a great "in time" indicator of both buyer and seller sentiment.

The volume of auctions didn’t quite reach the 2,000 mark last week, with 1,995 homes taken under the hammer.

This was the largest volume of auctions held in a week since the last week of June (2,030) and up 5.5% on the previous week’s volume of auctions.

See Corelogic's full auction report below.

Current property asking prices

Property asking prices are a useful leading indicator for housing markets - giving a good indication of what's ahead.

Here is the latest data available:

Sydney

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,904,031	-12.543	-1.5%	4.9%
All Units	821,051	1.049	0.2%	8.0%
Combined	1,466,335	-7.050	-1.1%	5.2%

Source: SQM Research

Melbourne

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,237,188	1.654	-0.7%	5.0%
All Units	609,688	-1.788	0.7%	4.0%
Combined	1,040,520	0.575	-0.5%	4.5%

Source: SQM Research

Brisbane

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,137,100	5.174	1.9%	15.8%
All Units	640,999	3.301	1.2%	21.7%
Combined	1,013,309	4.707	1.8%	16.6%

Source: SQM Research

Perth

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,038,953	1.547	1.5%	23.7%
All Units	549,403	-2.253	2.6%	22.3%
Combined	911,369	0.556	1.7%	23.3%

Source: SQM Research

Adelaide

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	929,717	4.649	1.3%	19.1%
All Units	469,708	7.042	2.5%	9.9%
Combined	847,158	5.079	1.4%	18.1%

Source: SQM Research

Canberra

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,198,354	-8.354	-1.6%	10.4%
All Units	577,930	-4.331	-2.5%	-4.2%
Combined	971,681	-6.884	-1.8%	6.5%

Source: SQM Research

Darwin

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	650,992	-5.192	-1.5%	-3.3%
All Units	379,048	-0.715	1.1%	0.8%
Combined	544,233	-3.434	-0.8%	-2.2%

Source: SQM Research

Hobart

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	784,156	2.207	-1.1%	-1.6%
All Units	498,484	-7.030	-1.3%	-2.2%
Combined	741,031	0.812	-1.1%	-1.7%

Source: SQM Research

National

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	931,956	-0.126	0.6%	9.6%
All Units	554,588	0.632	0.0%	7.6%
Combined	851,008	0.037	0.5%	9.3%

Source: SQM Research

Cap City Average

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,373,749	-5.717	-0.2%	7.8%
All Units	692,953	1.505	0.5%	9.3%
Combined	1,172,920	-3.587	-0.1%	7.9%

Source: SQM Research

The value of property asking prices as a leading indicator for housing markets is quite significant.

In fact it's more valuable than median prices which can be quite misleading.

Let's delve into why this is the case and how it impacts the real estate market.

Early Market Sentiment Indicator: Asking prices often reflect the current sentiment of sellers in the real estate market.

If sellers are confident, they might set higher asking prices, anticipating strong demand.
Conversely, if sellers are uncertain or perceive a market downturn, they might lower their asking prices to attract buyers.
This makes asking prices a real-time indicator of market sentiment, often preceding changes in actual sales prices.
Predictive of Future Price Trends: Trends in asking prices can be predictive of where the actual property prices are headed.
For example, a consistent rise in asking prices over a period can signal an upcoming rise in transaction prices.
Impact of Economic Factors: Economic factors such as interest rates, employment rates, and broader economic health influence asking prices.
For instance, changes in the Reserve Bank of Australia's policies or shifts in the job market can quickly reflect in the asking prices, providing insights into how these factors are influencing the housing market.
Regional Variations: In a diverse market like Australia's, asking prices can also provide insights into regional disparities.
For instance, the property markets in Melbourne and Sydney might behave differently from those in Brisbane or Perth. Asking prices can give early indications of these regional trends.
Influence of Supply and Demand: Asking prices are also a response to the balance of supply and demand in the market.
In areas with limited supply and high demand, asking prices tend to be higher and vice versa.

However, it's important to note that while asking prices are a valuable indicator, they should not be used in isolation.

Other factors like actual sales prices, time on the market, auction clearance rates, and economic conditions also play crucial roles in understanding the property market dynamics.

Last weekend's auction report

Preliminary clearance rate nudges higher week-on-week

The volume of auctions didn’t quite reach the 2,000 mark last week, with 1,995 homes taken under the hammer.

This was the largest volume of auctions held in a week since the last week of June (2,030) and up 5.5% on the previous week’s volume of auctions.

The rise in the preliminary clearance rate was mostly driven by Sydney, where 74.6% of auctions were successful so far, up from 68.0% the week prior (revised to 61.2% on final numbers).

Melbourne’s preliminary clearance rate slipped to 67.4%, holding below the 70% mark for four of the past five weeks and down from the 69.5% preliminary result a week prior (revised down to 62.3% once finalised).

Across the smaller auction markets, Adelaide continued to lead the auction clearance trends, with 83.7% of homes selling under the hammer last week, although this was down from 88.9% the week prior.

Brisbane recorded the highest volume of auctions across the smaller capitals, with 165 homes going to auction, returning an early clearance rate of 62.8%.

Canberra saw 88 homes taken to auction last week, returning a preliminary clearance rate of 66.1%.

Only 15 auctions were held in Perth, with a preliminary clearance rate of just 54.5% - a soft result for such a strong market, but the clearance rate can be extremely volatile across Perth amid low auction volumes.

The outlook for auctions is for a step up in volume over the coming weeks.

Around 2,100 homes are scheduled to go under the hammer this week, rising to around 2,300 the week after.

More broadly, the count of new listings coming to market has been tracking slightly higher than a year ago, up 2.5% nationally to be 11.8% above the previous five-year average (based on the number of listings coming to market over the four weeks ending August 18th).

The flow of freshly advertised housing stock is likely to pick up more substantially as spring arrives, as noted in last week’s research note from Eliza Owen outlining an average 18.2% lift in new listings between winter and spring over the past decade.

Our rental markets

CoreLogic’s hedonic rental index was only 0.1% higher in July, the smallest monthly rise since August 2020.

The monthly change in rents was negative in Sydney and Brisbane (-0.1% in both cities and the first monthly decline since 2020) as well as Hobart (-0.3%).

With value growth outpacing rental growth, we could once again see some downward pressure on gross rental yields