This week’s Australian Property Market Update – Latest Data, State by State October 15th 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 $11 trillion at the end of September. I remember when it hit $9 trillion before the pandemic and everyone was excited.

There were 2,525 auctions held across the capital cities last week, the second-highest volume through the spring season so far (after the week ending September 22nd with 2,781 auctions).

Based on results collected so far, the preliminary combined capitals clearance rate bounced a little higher, reaching 66.6%, up from 63.9% over the previous week, which revised down to 59.5% on final numbers (lowest finalised clearance rate since December last year).

This week, CoreLogic Research reports that:

Sydney property prices fell -0.1% over the last week, increased 0.1% over the last month and are 4.0% higher than they were 12 months ago.

Melbourne property prices remained flat over the last week, fell -0.1% over the last month, and are -1.7% lower compared to 12 months ago.

Brisbane property prices increased by 0.1% over the last week, increased 0.7% over the last month and are 14.0% higher than they were 12 months ago.

Overall, Australian capital dwelling prices increased by 0.4% over the last month and are now 6.6% 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 agreeing that there is no way we're going to hit the housing construction targets required to meet our demand.

The Australian property market is once again proving its resilience, but this time, it’s not the usual suspects like houses or premium properties driving value growth—it’s apartments.

According to new CBRE research, new-build apartment prices are forecast to grow 23% by 2026 as supply tightens to around 45% below pre-pandemic completion rates over the next five years.

CBRE’s Pacific Head of Research Sameer Chopra said newly built apartments are commanding a premium price compared to older stock.

“These premiums are justified by changing consumer expectations around amenities, like building security, lift access, flooring to rooftop gardens and gyms, which typically come with newer builds,” Mr Chopra said.

New one-bedroom apartments are delivering a 16% premium compared to older apartments, new two-bedroom apartments are at a 30% premium, and it’s a 45% increase for newly built three-bedroom apartments.

Of course, this means that established apartments are priced considerably below replacement cost today, which, in my mind, means they have substantial intrinsic value.

I see the current market offering a window of opportunity for property investors with a long-term focus.

We have what someone would call a "perfect storm" of factors that will lead to strong property markets over the next couple of years:

1. Continuing strong population growth
2. A shortage of skilled labour
3. A massive shortage of housing
4. Inflation is coming under control, and will soon be within the Reserve Bank's target range
5. Interest rates are set to fall

And when interest rates do start to fall, buyer and seller confidence returns... the property cycle will move to the next stage.

On the auction front...  there were 2,525 auctions held across the capital cities last week, the second-highest volume through the spring season so far (after the week ending September 22nd with 2,781 auctions).

Numbers are set to rise further over the coming weeks, with CoreLogic currently tracking around 2,600 properties scheduled for auction this week and more than 3,000 auctions over the following week.

According to CoreLogic, it's the second busiest auction week of the spring selling season

This week, CoreLogic also reports that:

• Sydney property prices fell -0.1% over the last week,  increased 0.1% over the last month and are 4.0% higher than they were 12 months ago.
• Melbourne property prices remained flat over the last week,  fell -0.1% over the last month, and are -1.7% lower compared to 12 months ago.

• Brisbane property prices increased by 0.1% over the last week, increased 0.7% over the last month and are 14.0% higher than they were 12 months ago.

Overall, Australian capital dwelling prices increased by 0.4% over the last month and are now 6.6% higher than they were 12 months ago.

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

Source: CoreLogic October 14th 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 14th October 2024 provided by SQM Research,  CoreLogic, and realestate.com.au.

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

Source: SQM Research

Melbourne

Source: SQM Research

Brisbane

Source: SQM Research

Perth

Source: SQM Research

Adelaide

Source: SQM Research

Canberra

Source: SQM Research

Darwin

Source: SQM Research

Hobart

Source: SQM Research

National

Source: SQM Research

Cap City Average

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.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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

Second busiest auction week of the spring selling season

The preliminary combined capitals clearance rate bounced a little higher, reaching 66.6%, up from 63.9% over the previous week, which revised down to 59.5% on final numbers (the lowest finalised clearance rate since December last year).

Melbourne hosted the most auctions last week, with 1,044 homes going under the hammer, down slightly from the week prior when 1,095 homes went to auction.

The preliminary clearance rate came in at 64.8%, roughly in line with the previous week (64.4% which was revised down to 59.4% on final numbers).

1,044 auctions were held in Sydney last week, up from 524 the previous week to be the third-highest volume of auctions so far this year.

The preliminary auction clearance rate posted a solid bounce back from the previous week, rising to 69.0% from 62.7% (which was revised down to 57.6% on final numbers).

Brisbane led the smaller capitals on volume, with 216 homes taken to auction, returning a preliminary clearance rate of 62.5%.

164 homes were auctioned in Adelaide with 67.5% selling so far (the second lowest preliminary clearance rate so far this year after the week ending August 4th at 66.7%).

83 auctions were held in the ACT with a preliminary clearance rate of 71.2% (highest since the week ending June 23rd).

13 auctions were held in Perth, with only 55.6% selling under the hammer and one auction was held in Tasmania which is yet to sell.

Our rental markets

The national rental index increased by just 0.1% over the September quarter, the smallest change over a rolling three-month period in four years.

Sydney (-0.5%), Brisbane (-0.2%) and Canberra (-0.8%) all recorded a reduction in rents over the quarter and rental growth is clearly losing steam in most other capitals.

Melbourne and Perth both recorded a 0.3% rise in rents through the quarter, a sharp slowdown from a year ago when the quarterly trend was up 2.2% and 2.3% respectively.

Sydney

Source: SQM Research

Melbourne

Source: SQM Research

Brisbane

Source: SQM Research

Perth

Source: SQM Research

Adelaide

Source: SQM Research

Canberra

Source: SQM Research

Darwin

Source: SQM Research

Hobart

Source: SQM Research

National

Source: SQM Research

Cap City Average

Source: SQM Research

Sellers of good properties are on strike

New listings levels continued to hold above average, with 39,994 new listings observed nationally over the four weeks to September 1st.

Winter historically has been a seasonally slow period for listings.

However, listing activity over the final month of winter was 4% above this time last year and 16.7% above the previous five-year average.

The problem is that very few are A Grade homes or investment grade properties. Owners of quality properties are still holding onto them.

At the national level, CoreLogic observed 140,107 for-sale listings over the four weeks to September 1st.

While overall listing levels have remained fairly subdued, the unseasonably high flow of new listings has seen stock levels accumulate, with the total listing count rising from around -25% below average at the start of 2024 to -12.4% below average.

Source: CoreLogic October 2024

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.

ALSO READ: Latest property price forecasts revealed. What’s ahead in our housing markets in the next year or two?

About Michael Yardney Michael is the founder of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.