Key takeaways
April is a holiday month with Easter, school holidays and Anzac Day interrupting our housing markets.
However, last weekend's auction results confirmed the strength and the depth of our property markets - the preliminary capital city clearance rate came in at 74.4% last weekend, up 1.7 percentage points relative to the previous week (72.7%)
Australia’s housing is so horribly undersupplied that I've rarely encountered a supply-demand inflection point like this.
Sydney property prices increased 0.1% over the last week, increased 0.4% over the last month and are 8.9% higher than they were 12 months ago.
Melbourne property prices remained flat over the last week, dropped -0.1% over the last month, and are 3.0% higher than they were 12 months ago.
Brisbane property prices increased by 0.2% over the last week, increased 0.8% over the last month and are 16.0% higher than they were 12 months ago.
Overall, Australian capital dwelling prices increased by 0.6% over the last month and are now 9.8% higher than they were 12 months ago.
Our combined capital cities have increased in value by 10.2% over the last year. That's very different to the pessimistic forecasts of double digit price falls made by the RBA and many of the bank economists only 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.
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 out demand.
In fact, we're going to miss them by a wide margin.
Analytics group, Oxford Economics believe we are missing our home building target by 30% each year saying that Australia needs to approve about 80,000 more homes annually to meet the national cabinet's 1.2 million new dwellings target.
Despite the challenges of cost-of-living pressures and high-interest rates, property prices just keep rising.
This trend is driven by a number of factors, including a chronic shortage of new homes at a time of strong population growth, high building costs, and a tight rental market, all of which boost housing demand.
The shortage of new housing is likely to persist, as new dwelling approvals have dropped to a nearly 12-year low after trending downward over the past two years.
The depth of demand for housing is showing itself every weekend as auction clearance rates keep holding up.
Remember... Auction clearance rates are a great "in time" indicator of both buyer and seller sentiment.
The preliminary capital city clearance rate came in at 74.4% last weekend, up 1.7 percentage points relative to the previous week (72.7% which Corelogic revised down to 65.2% once finalised).
The combined capitals preliminary clearance rate has consistently held above 71% through the year to-date, with a low of 71.1% in the last week of March to a high of 76.2% over the week ending February 11th.
See Corelogic's full auction report below.
Unfortunately, the undersupply properties is going to persist for some time with all commentators agreeing that there is no way we're going to hit the housing targets required to meet out demand.
In fact, we're going to miss them by a wide margin.
Analytics group, Oxford Economics believe we are missing our home building target by 30% each year saying that Australia needs to approve about 80,000 more homes annually to meet the national cabinet's 1.2 million new dwellings target.
The entrenched shortfall in supply is putting further pressure on soaring rents and dwelling prices, which are already at record levels, economists warned.
The total number of approvals for home construction declined by 5.8 per cent.
The total number of dwellings approved in February fell to 12,520, which is 5.8 per cent less than the same time last year.
And we know that just because dwellings are approved for construction, doesn't mean they come out of the ground.
Currently most apartment buildings are not financially able to develop, and developers won't take a risk until market values increase at least 30 to 40%.
This will come in time - the cycle will move on - but it also means that currently their significant intrinsic value in established family friendly apartments and will located homes or townhouses.
In other words, you can buy established properties today below its replacement cost.
Moving forward, demand is going to continue to outstrip supply for some time to come as we experience high levels of immigration at a time when we’re just not building anywhere as many properties as we require.
At the same time, the cost of construction of delivering new dwellings will keep increasing not only because of supply chain issues and the lack of sufficient skilled labour but also because builders and developers will only commence new projects if they are financially viable and currently new projects will need to come on line at considerably higher prices than the current market price,
It will be much the same for our rental market where the supply / demand equation is so far out of balance that we’ve experienced an unprecedented rental crisis with historically low vacancy rates and skyrocketing rents and this will continue into 2024.
This week, CoreLogic reports that:
- Sydney property prices increased 0.1% over the last week, increased 0.4% over the last month and are 8.9% higher than they were 12 months ago.
- Melbourne property prices remained flat over the last week, dropped -0.1% over the last month, and are 3.0% higher than they were 12 months ago.
- Brisbane property prices increased by 0.2% over the last week, increased 0.8% over the last month and are 16.0% higher than they were 12 months ago.
Overall, Australian capital dwelling prices increased by 0.6% over the last month and are now 9.8% higher than they were 12 months ago.
Clearly, the property cycle is moving on driven by an undersupply of good properties relative to steady demand from buyers.
Source: CoreLogic April 22nd 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.
The more expensive parts of our capital cities are likely to outperform this year as the local residence will, in general, have more equity in the properties they are selling, and they won't be as sensitive to high interest rates and the high cost of living as the outer and new suburbs.
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 22nd April 2024 provided by CoreLogic, and realestate.com.au.
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 for April 2024.
Sydney
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,895.349 | -8.957 | -0.2% | 6.8% |
| All Units | 788.356 | -3.056 | -1.2% | 4.1% |
| Combined | 1,449.525 | -6.581 | -0.4% | 5.8% |
Source: SQM Research
Melbourne
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,260.094 | -0.904 | 0.3% | 7.2% |
| All Units | 604.774 | -0.493 | -0.3% | 2.4% |
| Combined | 1,055.569 | -0.776 | 0.2% | 6.1% |
Source: SQM Research
Brisbane
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,081.092 | 3.858 | 1.1% | 14.1% |
| All Units | 599.498 | 2.852 | 1.7% | 18.9% |
| Combined | 961.234 | 3.608 | 1.2% | 14.7% |
Source: SQM Research
Perth
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 787.28 | 5.72 | 0.7% | 16.9% |
| All Units | 600.01 | 3.99 | 3.8% | 17.3% |
| Combined | 709.04 | 5.00 | 1.8% | 17.1% |
Source: SQM Research
Adelaide
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 632.93 | 3.07 | -1.1% | 10.7% |
| All Units | 470.69 | 4.31 | 2.5% | 15.8% |
| Combined | 577.11 | 3.50 | -0.1% | 12.2% |
Source: SQM Research
Canberra
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 769.27 | -3.27 | 0.3% | 0.5% |
| All Units | 570.94 | 0.06 | -0.9% | 2.5% |
| Combined | 661.71 | -1.46 | -0.3% | 1.4% |
Source: SQM Research
Darwin
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 667.541 | -1.941 | 1.2% | -0.2% |
| All Units | 371.172 | -0.172 | -1.2% | -2.9% |
| Combined | 551.297 | -1.247 | 0.5% | -1.0% |
Source: SQM Research
Hobart
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 786.911 | -3.184 | -1.8% | -0.8% |
| All Units | 5100.014 | 8.622 | 2.0% | -3.5% |
| Combined | 745.281 | -1.409 | -1.5% | -1.1% |
Source: SQM Research
National
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 910.019 | -6.696 | -0.4% | 10.4% |
| All Units | 538.412 | -0.429 | 0.6% | 6.2% |
| Combined | 830.601 | -5.357 | -0.3% | 9.8% |
Source: SQM Research
Cap City Average
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,360.165 | -2.369 | 0.1% | 8.9% |
| All Units | 667.617 | -0.700 | -0.6% | 5.8% |
| Combined | 1,156.746 | -1.879 | -0.1% | 8.1% |
Source: SQM Research
The value of property asking prices as a leading indicator for housing markets is quite significant.
- Also read:This week’s Australian Property Market Update – Latest Data, State by State April 23rd 2024
- Also read:Melbourne property market forecast for 2024
- Also read:Brisbane’s property market forecast for 2024
- Also read:Sydney property market forecast for 2024
- Also read:Latest property price forecasts for 2024 revealed. What’s ahead in our housing markets in the next year or two?
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.
READ MORE: The latest median property prices in Australia’s major cities
Last weekend's auction report
Improvement in preliminary clearance rate across combined capital cities
The preliminary capital city clearance rate came in at 74.4% last week, up 1.7 percentage points relative to the previous week (72.7% which was revised down to 65.2% once finalised).
The combined capitals preliminary clearance rate has consistently held above 71% through the year to date, with a low of 71.1% in the last week of March to a high of 76.2% over the week ending February 11th.
Sydney and Melbourne both recorded a preliminary clearance rate in the early 70% range, at 73.8% and 72.7% respectively, with finalised clearance rates tracking lower in Melbourne, holding below 63% over the past four weeks, while Sydney’s final clearance rates have held in the high 60% to low 70% range.
A similar trend is reflected in the pace of value growth, with CoreLogic’s daily HVI up 0.4% in Sydney over the past four weeks while the index for Melbourne is virtually flat (-0.1%).
Across the smaller auction markets, Adelaide continues to stand out with an early clearance rate of 86.5%, similar to the week prior (87.8% which was revised down to 84.4%).
Brisbane’s preliminary clearance rate was 75.0% and Canberra came in at 67.7%.
The past four weeks have seen the preliminary auction clearance rate average 73.5%, a little lower than the first four weeks of the auction season (74.8%), but substantially higher relative to the last four weeks of the 2023 auction season (66.7%).
The past four weeks have also seen the preliminary auction clearance rate revised lower by an average of 7.3 percentage points, with the final clearance rate recording a low of 64.8% in the last week of March and a high of 70.3% over the week ending February 11th.
With 1,888 auctions held last week, activity across the auction market has drifted lower which is seasonally ‘normal’ post-Easter.
Apart from long weekend disruptions, this was the lowest number of weekly auctions held since the week ending February 11th.
This week around 1,900 properties are currently scheduled to go under the hammer.
| City | Clearance Rate | Total Auctions | CoreLogic auction results | Cleared Auctions | Uncleared Auctions |
|---|---|---|---|---|---|
| Sydney | 73.8% | 613 | 424 | 313 | 111 |
| Melbourne | 72.7% | 877 | 670 | 487 | 183 |
| Brisbane | 75.0% | 177 | 96 | 72 | 24 |
| Adelaide | 86.5% | 167 | 74 | 64 | 10 |
| Perth | n/a | 9 | 6 | 4 | 2 |
| Tasmania | n/a | 2 | 1 | 1 | 0 |
| Canberra | 67.7% | 43 | 31 | 21 | 10 |
| Weighted Average | 74.4% | 1,888 | 1,302 | 962 | 340 |
Source: CoreLogic
Our rental markets
Our rental markets have been tightening further over the last few months, with vacancy rates for both houses and apartments extremely low across the country and asking rents rising rapidly.
Asking rents across the capital cities for houses had been rising in annual terms in the “double digits”, while for units, new asking rents are rising at faster rates, at over 20% in Sydney, Melbourne and Brisbane.
The recently released National Accounts showed that Australia’s population has grown by around 620,000 people in the past financial year.
That’s the highest number in history and a hundred thousand more than what the May federal budget projected.
This record 2.8% expansion in the 15 plus age group of our population is placing a great strain on our rental markets.
The number of overseas students and also people on graduate visas in Australia has increased by just over three hundred thousand in the last financial year.
In particular rents have been rebounding across inner-city rental markets (popular with international students) after slumping during the pandemic when international borders were closed.
While the pace of rental growth is likely to slow down, with current vacancy rates rents will continue to increase as there is a minimal new supply of properties set to enter the market in the medium-term future.
Sydney
| Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
|---|---|---|---|---|
| All Houses | $1,057.28 | 3.72 | 0.5% | 10.5% |
| All Units | $709.47 | -0.47 | 0.8% | 7.9% |
| Combined | $850.83 | 1.23 | 0.7% | 9.2% |
Source: SQM Research
Melbourne
| Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
|---|---|---|---|---|
| All Houses | $743.14 | 2.86 | 0.3% | 11.7% |
| All Units | $557.90 | -0.90 | 0.3% | 8.1% |
| Combined | $634.28 | 0.65 | 0.3% | 9.8% |
Source: SQM Research
Brisbane
| Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
|---|---|---|---|---|
| All Houses | $716.46 | -0.46 | 0.2% | 6.2% |
| All Units | $578.70 | 1.30 | 1.1% | 10.3% |
| Combined | $654.47 | 0.33 | 0.5% | 7.8% |
Source: SQM Research
Perth
| Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
|---|---|---|---|---|
| All Houses | $782.05 | -3.05 | 0.4% | 16.9% |
| All Units | $593.27 | 4.73 | 2.8% | 16.3% |
| Combined | $703.18 | 0.20 | 1.2% | 16.7% |
Source: SQM Research
Adelaide
| Property Type | Rent $) | Weekly change | Monthly change | 12 Months change |
|---|---|---|---|---|
| All Houses | $629.87 | 0.13 | -1.3% | 10.0% |
| All Units | $468.12 | 3.88 | 2.2% | 15.4% |
| Combined | $574.22 | 1.42 | -0.3% | 11.6% |
Source: SQM Research
Canberra
| Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
|---|---|---|---|---|
| All Houses | $772.54 | 7.46 | 2.1% | 0.8% |
| All Units | $574.13 | 1.87 | -0.3% | 2.8% |
| Combined | $664.94 | 4.43 | 0.9%1.7 | % |
Source: SQM Research
Darwin
| Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
|---|---|---|---|---|
| All Houses | $707.04 | -11.04 | -0.5% | -2.5% |
| All Units | $521.13 | 28.87 | 4.8% | 5.3% |
| Combined | $596.33 | 12.73 | 2.2% | 1.5% |
Source: SQM Research
Hobart
| Property Type | Rent 9$) | Weekly change | Monthly change | 12 Months change |
|---|---|---|---|---|
| All Houses | $537.18 | -0.18 | -0.5% | 0.0% |
| All Units | $456.30 | -7.30 | -2.3% | -6.5% |
| Combined | $504.68 | -3.04 | -1.1% | -2.5% |
Source: SQM Research
National
| Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
|---|---|---|---|---|
| All Houses | $695.00 | 3.00 | 1.0% | 9.8% |
| All Units | $542.00 | 1.00 | 1.5% | 10.4% |
| Combined | $623.91 | 2.07 | 1.2% | 10.1% |
Source: SQM Research
Cap City Average
| Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
|---|---|---|---|---|
| All Houses | $839 | 6.00 | 0.7% | 11.0% |
| All Units | $628 | 0.00 | 0.8% | 8.7% |
| Combined | $726.65 | 2.81 | 0.8% | 9.9% |
Source: SQM Research
Vendor metrics
As the following chart shows, houses are still being snapped up quickly by eager buyers.
At a national level, properties are taking slightly longer to sell than they were during the property boom of 2020 and 2021.
However, the number of days to sell a property is still relatively low (a sign of the tight supply situation for good properties), and vendor discounting is still at very low levels.
In general, houses are selling quicker than apartments, but the shortage of good properties on the market is seeing A-grade properties selling quickly with minimal discounting.
