Key takeaways
CoreLogic estimates that the total value of Australian residential real estate was $10.7 trillion at the end of May 2024.
The pace of quarterly growth continued to tick higher in May, with values up 1.9%, up from a recent low of 1.1% over the three months to January.
Over the three months to May, lower quartile dwelling values (3.0%) rose at more than twice the pace of upper quartile values (1.2%), with growth conditions continuing to be skewed toward the more affordable section of the market.
Despite the uptick in quarterly growth, annual growth continued to ease from 9.4% over the year to February, to 8.3% over the 12 months to May.
Perth continues to lead capital growth performance in the greater capital city markets, with values up 2.0% in the three months to May and up 22% over the past year.
New listings are trending higher than the historic five-year average and higher than this time last year, driven by above-average vendor activity in Sydney and Melbourne in particular. In the four weeks to June 2nd, new listings totalled 38,236 nationally.
CoreLogic estimates that 42,944 homes were sold in May, taking the rolling annual count to 503,729. Compared to this time last year, annual national estimates are up 7.1% but have eased slightly from an annual peak of 505,623 in the 12 months to April.
The national median time on the market was 31 days in the three months to May, which was steady at this time last year.
Vendor discounting rates dropped slightly across the combined capital cities market over the three months to May. The median vendor discount was -3.3% over the period, down from -3.2% in the previous month.
The combined capital cities clearance rate has gradually trended lower since early February, suggesting slightly weaker selling conditions amid high interest rates and a weakening economic environment. In the four weeks ending June 2nd, the combined capital cities clearance rate averaged 65.1%, down from 65.9% in the previous four-week period.
The annual change in national rents held steady for a fourth consecutive month at 8.5% in May. Underneath the headline figure, the annual pace of growth in regional rents has accelerated to 6.9% (up from a recent low of 3.7% in the year to September 2023), while the pace of growth in capital city rent values has slowed to 9.1% (down from 10.6% in April 2023).
Dwelling approvals nudged 0.3% lower in April, led by a 1.0% fall in detached housing approvals, and partially offset by a 1.1% rise in multi-unit approvals. The monthly approvals data is always a bit volatile, but the trend shows little evidence of a turnaround in the early stages of new dwelling supply.
The value of home lending rose 4.8% through April, to $29.4 billion. Owner-occupier finance accounted for most of the monthly increase (around 57%). However, the pace of increase was faster across investment property lending, which was up 5.6% month-on-month, compared to a 4.3% lift across owner-occupier lending.
Want to know what's happening to the housing markets around Australia?
Well... this monthly collection of charts from CoreLogic paints an interesting picture.
And later this year as buyers and sellers realise that we have reached a peak of interest rates and that inflation is coming under control, consumer confidence will return and buyer and seller activity will pick up.
So I currently see a window of opportunity to get into the property market before "the crowd" does.
Residential real estate underpins Australia's wealth
- The total value of Australian residential real estate was $10.7 trillion at the end of May 2024.
- However, outstanding mortgages against all residential housing are only $2.3 trillion - a very comfortable 22% Loan to Value ratio.
- 56.2% of total Aussie household wealth is held in residential property - one of the many reasons neither the banks, the government nor the RBA wants a property crash.
The pace of quarterly growth continue to tick higher in May
- The pace of quarterly growth continued to tick higher in May, with values up 1.9%, up from a recent low of 1.1% over the three months to January.
- Despite the uptick in quarterly growth, annual growth continued to ease from 9.4% over the year to February, to 8.3% over the 12 months to May.
- Over the three months to May, lower quartile dwelling values (3.0%) rose at more than twice the pace of upper quartile values (1.2%), with growth conditions continuing to be skewed toward the more affordable section of the market.
- However, our property markets are fragmented and while most segments growing, some are still languishing.
Our capital city markets are fragmented
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.
Each State is running its own race
- On the one hand, Perth property values are up 22.0% over the year and are now at a record high.
- On the other hand, while Melbourne property values, increased 0.1% over the last month, 1.8% over the last year, and are still -4.0% below the record high, which was in March 2022.
- And in the previous darling of the housing markets, Hobart, house prices are -11.5 % below their record highs recorded in March 2022.
Another star performer was Brisbane where property values increased 16.3% over the last year and are currently at a record high.
And Sydney property values which performed strongly over the past year (+7.4%) have made a nominal recovery, sitting at the same level they were at in January 2022.
Here's how the Adelaide property market performed.
The Canberra housing market languished last year
Similarly, the Darwin housing market underperformed in the last year.
Here's how many properties are for sale at the moment
- In the four weeks to June 2nd, new listings totalled 38,236 nationally.
- New listings are trending higher than the historic five-year average and higher than this time last year, driven by above-average vendor activity in Sydney and Melbourne in particular.
- 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, the total stock for sale was 138,519 over the four weeks to June 2nd.
- Despite new listings tracking above average, overall listings levels have remained fairly subdued, due to a strong rate of absorption from sales.
National sales activity continues to trend higher
- CoreLogic estimates that 42,944 homes were sold in May, taking the rolling annual count to 503,729.
- Compared to this time last year, annual national estimates are up 7.1% but have eased slightly from an annual peak of 505,623 in the 12 months to April.
We've moved into a more balanced market
- The national median time on the market was 31 days in the three months to May, which was steady at this time last year.
- Across the individual capitals, Perth dropped to just 10 days (from 15 days this time last year), while homes are taking longer to sell in Sydney, Melbourne and Hobart.
Vendor Discounting
- Vendor discounting rates dropped slightly across the combined capital cities market over the three months to May.
- The median vendor discount was -3.3% over the period, down from -3.2% in the previous month.
- Despite varied market conditions across the capital cities, vendor discounting was smaller compared to this time last year in most markets.
The combined capital cities clearance rate has gradually trended lower
- The combined capital cities clearance rate has gradually trended lower since early February, suggesting slightly weaker selling conditions amid high interest rates and a weakening economic environment.
- In the four weeks ending June 2nd, the combined capital cities clearance rate averaged 65.1%, down from 65.9% in the previous four-week period.
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We update the weekly auction clearance results here each week.
We're experiencing a rental market crisis in Australia
- The annual change in national rents held steady for a fourth consecutive month at 8.5% in May.
- Underneath the headline figure, the annual pace of growth in regional rents has accelerated to 6.9% (up from a recent low of 3.7% in the year to September 2023), while the pace of growth in capital city rent values has slowed to 9.1% (down from 10.6% in April 2023).
- Gross rental yields continued to expand in May to 3.75%, up from a revised 3.74% in April.
- This is the highest national result since October 2019 (3.77%). While gross yields have seen a significant improvement from recent lows, it is likely that highly leveraged investors' net yields continue to be weighed down by high interest rates.
Dwelling approvals and housing credit
- Dwelling approvals nudged 0.3% lower in April, led by a 1.0% fall in detached housing approvals, and partially offset by a 1.1% rise in multi-unit approvals.
- The monthly approvals data is always a bit volatile, but the trend shows little evidence of a turnaround in the early stages of new dwelling supply.
Finance and Lending
- The value of home lending rose 4.8% through April, to $29.4 billion.
- Owner-occupier finance accounted for most of the monthly increase (around 57%).
- However, the pace of increase was faster across investment property lending, which was up 5.6% month-on-month, compared to a 4.3% lift across owner-occupier lending.
- The value of first home buyer finance rose by 3.4% in April to $5.4 billion.
- First home buyers made up 29.2% of the value of owner-occupied lending, down slightly from the previous month (29.5%), but well above the historic decade average
(24.6%).
Source of charts: CoreLogic Chart Pack, June 2024.