Key takeaways
We're almost at the end of the year and property prices have kept rising for almost 11 months in a row despite 13 interest rate rises, high inflation and reduced borrowing capacity.
The peak-to-trough change in Australian house prices in 2022 was 9 per cent according to Corelogic, and only 4 per cent according to PropTrack, which is confusing those analysts who were looking for prices to drop further this year on the back of interest rate increases.
But now it is clear that our property markets bottomed in January 2023 and we have moved into the next phase and our combined capital cities have increased in value by 8.0% in the year to date. That's very different to the pessimistic forecasts made by the RBA and many of the bank economists only 12 months ago of double digit price falls.
And it's likely property prices and rents are going to keep increasing, but more slowly for the remainder of the year and into next year.
With the pipeline of new listings now diminishing as the year ends at a time when many buyers are keen to complete their transaction before the holiday break, it's not likely that the latest interest rate rise will stall the market.
Sydney property prices increased by 0.1% over the last week and increased 0.1% over the last month and are up 11.4% year to date, and are 10.1% higher than they were 12 months ago.
Melbourne property prices dropped -0.1% over the last week, also dropped -0.1% over the last month but are up 4.0% year to date, and also 2.9% higher than they were 12 months ago.
Brisbane property prices increased by 0.3% over the last week, increased 1.2% over the last month and are up 11.5% year to date, and also 10.3% higher than they were 12 months ago.
Overall, Australian capital dwelling prices increased by 0.5% over the last month and are now 8.4% higher than they were 12 months ago.
This new property cycle has been driven by an undersupply of good properties relative to current demand, but market momentum is now slowing.
Australia’s housing market continues to defy expectations!
Despite 13 interest rate increases from the Reserve Bank of Australia, which have seen official rates rise by 4.25 per cent over the 18 months, property prices have now been on the rise since early 2023.
With the pipeline of new listings now diminishing as the year ends at a time when many buyers are keen to complete their transaction before the holiday break, it's not likely that the latest interest rate rise will stall the market.
It seems that even the most pessimistic forecasters have had to change their minds and accept that most capital city markets will enjoy double digit capital growth this year, but some of the property bears have come back out of their caves and are predicting values to fall in 2024.
While capital growth is likely to be much more subdued in 2024, our 5 major capital cities should still see price growth next year, while Hobart, Canberra and Darwin may see prices fall a little in 2024
The underlying reason for continued property price growth will be that the demand to buy homes will continue to exceed supply, but moving forward our markets will be fragmented with a flight to quality properties.
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.
On the auction front, with 2,972 homes auctioned across the capitals, easing slightly from the 2,990 held the week prior, this is the third busiest auction week of the year-to-date (behind the week ending 29 October and the week ending 19 November).
Last week's auction numbers were 23.9% higher than the numbers seen this time last year (2,414).
While vendor numbers remain high, buyers have become more cautious, with last week's preliminary capital city clearance rate coming in at 65.9% - the lowest since mid-March (65.0%).
With 2,261 results collected so far, last week's early success rate was 2.1 percentage points below the previous week's preliminary rate (68.0%, revised to 62.4% at final numbers) and will likely also revise below the decade average (65.8%) once finalised.
See Corelogic's full auction report below.
Corelogic report that:
- Sydney property prices increased by 0.1% over the last week and increased 0.1% over the last month and are up 11.4% year to date, and are 10.1% higher than they were 12 months ago.
- Melbourne property prices dropped -0.1% over the last week, also dropped -0.1% over the last month but are up 4.0% year to date, and also 2.9% higher than they were 12 months ago.
- Brisbane property prices increased by 0.3% over the last week, increased 1.2% over the last month and are up 11.5% year to date, and also 10.3% higher than they were 12 months ago.
Overall, Australian capital dwelling prices increased by 0.5% over the last month and are now 8.4% higher than they were 12 months ago.
Clearly we are in the early stages of a new property cycle driven by an undersupply of good properties relative to increasing demand.
Source: CoreLogic November 27th 2023
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.
In 2022 price declines had been led by the top end of our housing markets, and while these turned around to be the strongest sectors of our markets early this year, particularly in Sydney, now median price properties are increasing in value strongly.
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 27th November 2023 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.
| SQM Research Weekly Asking Prices Index | |||||
| Week ending 21 Nov 2023 |
Asking Price ($) |
Chg on prev wk($) |
Rolling month % chg |
12 mth % chg |
|
| Sydney | All Houses | 1,856.661 | -5.261  |
-1.2% |
9.1%  |
| All Units | 775.862 | 3.638 |
-0.8% |
7.3% |
|
| Combined | 1,423.106 | -1.691 |
-1.1% |
8.3% |
|
| Melbourne | All Houses | 1,203.011 | -2.111 |
0.3% |
3.8% |
| All Units | 598.979 | 2.320 |
1.2% |
2.6% |
|
| Combined | 1,015.455 | -0.735 |
0.4% |
3.3% |
|
| Brisbane | All Houses | 1,014.781 | 2.787 |
0.5% |
8.9% |
| All Units | 543.529 | 0.971 |
0.5% |
12.7% |
|
| Combined | 897.953 | 2.337 |
0.5% |
9.3% |
|
| Perth | All Houses | 868.027 | -1.841 |
1.2% |
9.6% |
| All Units | 457.007 | 0.593 |
1.1% |
9.9% |
|
| Combined | 761.579 | -1.211 |
1.1% |
9.5% |
|
| Adelaide | All Houses | 814.642 | -1.077 |
0.9% |
8.5% |
| All Units | 442.557 | 1.943 |
2.6% |
18.7% |
|
| Combined | 747.958 | -0.536 |
1.1% |
9.5% |
|
| Canberra | All Houses | 1,180.118 | 21.507 |
5.6% |
9.0% |
| All Units | 596.814 | -0.689 |
-0.9% |
4.9% |
|
| Combined | 970.164 | 13.518 |
4.1% |
7.9% |
|
| Darwin | All Houses | 686.068 | -2.268 |
-0.8% |
3.0% |
| All Units | 375.917 | -0.917 |
-0.8% |
0.1% |
|
| Combined | 564.498 | -1.739 |
-0.8% |
2.2% |
|
| Hobart | All Houses | 794.823 | 2.904 |
-0.8% |
-2.2% |
| All Units | 539.695 | 3.605 |
7.7% |
13.8% |
|
| Combined | 756.647 | 3.009 |
0.0% |
-0.8% |
|
| National | All Houses | 879.070 | 4.079 |
0.3% |
6.3% |
| All Units | 520.447 | 2.589 |
0.3% |
3.6% |
|
| Combined | 802.711 | 3.762 |
0.3% |
5.8% |
|
| Cap City Average | All Houses | 1,300.714 | -2.353 |
-0.7% |
7.1% |
| All Units | 653.713 | 7.883 |
0.1% |
7.0% |
|
| Combined | 1,111.613 | 0.639 |
-0.6% |
6.8% |
|
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 market, auction clearance rates, and economic conditions also play crucial roles in understanding the property market dynamics.
Last weekend's auction report.
Softest capital city preliminary clearance rate since mid-March, an early sign of weaker conditions ahead
CoreLogic reports that capital city auction activity held relatively steady last week, with 2,972 homes auctioned across the capitals, easing slightly from the 2,990 held the week prior.
The third busiest auction week of the year-to-date (behind the week ending 29 October and the week ending 19 November), last week's auction numbers were 23.9% higher than the numbers seen this time last year (2,414).
While vendor numbers remain high, buyers have become more cautious, with last week's preliminary capital city clearance rate coming in at 65.9% - the lowest since mid-March (65.0%).
With 2,261 results collected so far, last week's early success rate was 2.1 percentage points below the previous week's preliminary rate (68.0%, revised to 62.4% at final numbers) and will likely also revise below the decade average (65.8%) once finalised.
Across the largest auction markets, Melbourne recorded a mild easing in weekly auction activity, down -7.0% to 1,311, while Sydney hosted its busiest auction week of the year to date with 1,154 homes auctioned, up 8.6% week-on-week.
Up 39.5% and 14.4%, respectively, compared to the same time last year, last week's auction numbers have corresponded with a normalising in stock levels across both cities.
- Also read:Boom to bust: What makes property prices rise and fall
- Also read:Latest property price forecasts for 2024 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:Sydney property market forecast for 2024
- Also read:This week’s Australian Property Market Update – Latest Data, State by State November 28th, 2023
- Also read:The Boom and Bust of our Property Cycles: A Journey Through the Investor’s Mind
Total listing levels across Melbourne are now 7.6% above the 5-year average for this time of year, while Sydney levels are now in line with the average (0.7%).
With 910 results collected so far, Sydney's preliminary clearance rate held firm relative to the week prior at 68.7%.
Melbourne's early success rate fell 3.9 percentage points to 64.1%, with 1,013 results collected.
While this week’s preliminary results are still higher than the final rates seen this time last year, both cities have seen the final clearance rate drift below the decade average over the past few weeks - a clear sign that selling conditions are swinging back towards buyers.
Across the smaller auction capitals, Brisbane hosted the busiest auction week, with 200 homes auctioned last week, followed by Adelaide (161), Canberra (124), and Perth (19).
Adelaide and Perth recorded the highest preliminary clearance rates, both at 76.9%, followed by Brisbane at 61.7%.
These cities continue to record listing levels well below average, helping to support above-average auction success rates and strong value growth.
In contrast, Canberra's preliminary rate came in below average at 52.7%, with total listing numbers holding 15.1% above the levels usually seen this time of year, while none of the three auctions held in Tasmania last week have reported successful results.
With still a few weeks of strong auction volumes expected before the festive season slowdown, it will be important to see how selling conditions pan out as we approach the end of the spring/early summer selling season.
At the moment, it's looking increasingly likely that selling conditions will continue to soften into 2024.
| City | Clearance rate | Total auctions | CoreLogic auction results | Cleared auctions | Uncleared auctions |
| Sydney | 68.7% | 1,154 | 910 | 625 | 285 |
| Melbourne | 64.1% | 1,311 | 1,013 | 649 | 364 |
| Brisbane | 61.7% | 200 | 141 | 87 | 54 |
| Adelaide | 76.9% | 161 | 91 | 70 | 21 |
| Perth | 76.9% | 19 | 13 | 10 | 3 |
| Tasmania | n.a. | 3 | 2 | 0 | 2 |
| Canberra | 52.7% | 124 | 91 | 48 | 43 |
| Weighted Average | 65.9% | 2,972 | 2,261 | 1,489 | 772 |
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.
| SQM Research Weekly Rents Index | |||||
| Week ending 20 Nov 2023 |
Rent ($) |
Chg on prev wk($) |
Rolling month % chg |
12 mth % chg |
|
| Sydney | All Houses | 1,019.29 | 6.71 |
1.9% |
15.8% |
| All Units | 681.76 | 2.24 |
0.8% |
17.3% |
|
| Combined | 818.91 | 4.06 |
1.4% |
16.6% |
|
| Melbourne | All Houses | 706.93 | 5.07 |
0.7% |
19.0% |
| All Units | 519.60 | -1.60 |
-0.2% |
13.6% |
|
| Combined | 596.69 | 1.15 |
0.3% |
16.2% |
|
| Brisbane | All Houses | 705.63 | -0.63 |
0.5% |
9.8% |
| All Units | 550.62 | 2.38 |
0.7% |
15.2% |
|
| Combined | 635.85 | 0.73 |
0.6% |
11.9% |
|
| Perth | All Houses | 731.28 | 0.72 |
0.4% |
17.8% |
| All Units | 553.18 | -0.18 |
1.5% |
18.4% |
|
| Combined | 656.74 | 0.34 |
0.8% |
18.0% |
|
| Adelaide | All Houses | 604.32 | 0.68 |
1.5% |
12.6% |
| All Units | 445.70 | 8.30 |
1.3% |
12.7% |
|
| Combined | 549.56 | 3.31 |
1.5% |
12.8% |
|
| Canberra | All Houses | 723.02 | 0.98 |
-0.9% |
-3.3% |
| All Units | 569.70 | 1.30 |
1.9% |
1.6% |
|
| Combined | 640.01 | 1.15 |
0.4% |
-1.0% |
|
| Darwin | All Houses | 730.13 | -10.13 |
-2.7% |
11.3% |
| All Units | 487.38 | 28.62 |
2.8% |
3.8% |
|
| Combined | 585.58 | 12.94 |
0.0% |
7.5% |
|
| Hobart | All Houses | 526.96 | 1.04 |
2.8% |
-0.6% |
| All Units | 455.84 | 0.16 |
1.4% |
-3.0% |
|
| Combined | 498.36 | 0.69 |
2.3% |
-1.4% |
|
| National | All Houses | 671.00 | 3.00 |
1.5% |
8.1% |
| All Units | 521.00 | 3.00 |
0.8% |
10.9% |
|
| Combined | 601.22 | 3.00 |
1.2% |
9.2% |
|
| Cap City Average | All Houses | 804.00 | 7.00 |
1.1% |
14.9% |
| All Units | 597.00 | 0.00 | 0.7% |
15.5% |
|
| Combined | 693.74 | 3.27 |
0.9% |
15.2% |
|
Source: SQM Research
Sellers of good properties are on strike
With the Spring selling season almost over for 2023, fewer sellers are putting their properties on the market, meaning there is an acute shortage of A grade homes and investment grade properties for sale at present.
Source: Corelogic November 2023
The charts below show the lack of property listings available for serious buyers at present, and with home buyers back in the market well located properties are being snapped up quickly.
But not all properties are selling well- there is currently a flight to quality.
Property listings for sale provide a useful real-time indicator of seller sentiment and general market confidence.
However, this year sellers have erred on the side of caution before listing with the flow of new listings consistently below average since spring last year.
Source: CoreLogic November 2023
Vendor Metrics
As the following chart shows, houses are still being snapped up quickly by eager buyers.
READ MORE: The latest median property prices in Australia’s major cities
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.
