By Michael Yardney June 18, 2024

A A A

80 View comments

This week’s Australian Property Market Update – Latest Data, State by State June 19th 2024

Property Market News
This week’s Australian Property Market Update – Latest Data, State by State June 19th 2024

Key takeaways

The RBA kept rates on hold as universally expected. They debated the case for a rate hike, as they did back in May.

The Board is alert to upside risks to inflation persistence.

The preliminary combined capitals clearance rate also bounced higher to 72.9%, the strongest early result since the first week of May (73.5%).

The number of homes going under the hammer rebounded last week following the previous week’s drop in auction volume due to the King’s Birthday long weekend in many states.

2,232 auctions were held, up from 1,317 the week prior and nearly 15% higher than at the same time last year.

This week, SQM Research reports that:

Sydney asking property prices increased 13.9% over the last week, increased 1.7% over the last month and are 7.5% higher than they were 12 months ago.

Melbourne asking property prices increased 3.1% over the last week, also increased 0.6% over the last month, and are 5.6% higher than they were 12 months ago.

Brisbane asking property prices increased by 1.5% over the last week, increased 1.1% over the last month and are 15.1% higher than they were 12 months ago.

Overall, Australian capital dwelling prices increased by 1.8% over the last month and are now 9.4% 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 there was nothing in last week's budget 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.

The RBA left the cash rate on hold at 4.35% at its June meeting, but their rhetoric suggests the Board is more alert to upside inflation risks.

Indeed, the RBA Board appears less certain that inflation is moderating as they'd like, and there are lingering concerns about persistent price pressures.

The RBA last hiked in November 2023, and a ‘high for longer’ theme has played out since.

Importantly, in this week's meeting the Board debated hiking the cash rate or leaving the cash rate alone.

The Board did not consider cutting the cash rate. The decision was made to stay the course.

In perhaps one of the more telling remarks of her press conference, Governor Bullock said “we need a lot to go our way if we are going to bring inflation down to the 2-3% target” and the economy’s narrow path is “getting a bit narrower.”

However, she also emphasised that the case for a rate rise isn’t increasing.

Instead, there are a few factors that are making the Board a bit more alert to the upside risks. It means the data flow between now and the next Board meeting will be critical, especially the June quarter inflation read and data on the labour market.

The consensus among economists is that rate hikes are finished and the next move from the RBA will be a cut, but the timing is highly uncertain.

Housing markets seem to be somewhat insulated from higher interest rates, with CoreLogic’s Home Value Index continuing to rise through June, and the combined capitals daily index already 0.4% higher over the first 18 days of the month.

Similarly, the volume of home sales is tracking higher than a year ago and above the five-year average, demonstrating consistently strong demand from purchasers despite an array of headwinds including high interest rates, cost of living pressures, low sentiment and stretched affordability

So what factors will the RBA take into account?

Dr Andrew Wilson has provided the following matrix of factors and concludes that, on balance, interest rates will remain steady for quite some time.

Preliminary auction clearance rate of 72.4% across combined capitals

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

There were 2,074 capital city homes taken to auction last week, compared to 2,276 over the previous week and 1,791 this time last year.

The preliminary clearance rate came in at 72.4%, just 50 basis points lower than the previous week’s preliminary clearance rate (72.9%, revised down to 65.5% once finalised).

There were 829 auctions held in Sydney returning a preliminary clearance rate of 70.7%, down -4.3 percentage points on the week prior (75.0%, revised down to 65.5% on final results).

The previous week saw 812 homes taken to auction across the city, while 724 auctions were held this time last year.

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 as of 18th June 2024:

Sydney

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,964,905	23.490	2.0%	8.6%
All Units	812,007	-0.207	0.8%	5.2%
Combined	1,499,789	13.930	1.7%	7.5%

Source: SQM Research

Melbourne

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,262,090	5.010	0.7%	6.7%
All Units	605,383	-0.845	0.1%	2.1%
Combined	1,060,841	3.179	0.6%	5.6%

Source: SQM Research

Brisbane

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,107,564	0.649	0.9%	14.4%
All Units	624,747	4.353	2.7%	19.8%
Combined	987,248	1.572	1.1%	15.1%

Source: SQM Research

Perth

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,011,343	8.447	2.3%	20.0%
All Units	526,723	0.877	2.1%	19.2%
Combined	885,239	6.477	2.2%	19.7%

Source: SQM Research

Adelaide

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	914,576	-3.586	1.3%	16.3%
All Units	470,842	3.608	0.7%	11.2%
Combined	834,978	-2.296	1.2%	15.7%

Source: SQM Research

Canberra

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,222,907	-6.807	1.5%	18.0%
All Units	606,013	0.549	1.6%	1.7%
Combined	998,430	-4.130	1.5%	13.6%

Source: SQM Research

Darwin

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	659,336	-2.936	-0.6%	-3.4%
All Units	374,604	1.729	1.0%	-0.7%
Combined	548,695	4.349	0.2%	-2.2%

Source: SQM Research

Hobart

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	788,732	-0.096	0.6%	0.5%
All Units	511,267	-4.177	-3.6%	0.0%
Combined	746,929	-0.711	0.1%	0.4%

Source: SQM Research

National

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	933,859	-0.214	1.5%	10.3%
All Units	549,566	2.042	0.8%	7.3%
Combined	851,581	0.269	1.4%	9.8%

Source: SQM Research

Cap City Average

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,406,571	11.303	2.1%	10.4%
All Units	684,855	-3.548	0.5%	6.0%
Combined	1,194,140	6.932	1.8%	9.4%

Next update: 25th June 202024

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 auction clearance rate of 72.4% across combined capitals

There were 2,074 capital city homes taken to auction last week, compared to 2,276 over the previous week and 1,791 this time last year.

The preliminary clearance rate came in at 72.4%, just 50 basis points lower than the previous week’s preliminary clearance rate (72.9%, revised down to 65.5% once finalised).

There were 829 auctions held in Sydney returning a preliminary clearance rate of 70.7%, down -4.3 percentage points on the week prior (75.0%, revised down to 65.5% on final results).

The previous week saw 812 homes taken to auction across the city, while 724 auctions were held this time last year.

Across Melbourne, 920 homes were taken to auction last week, compared to 1,083 over the previous week and 744 one year ago.

Melbourne’s preliminary clearance rate came in at 72.9%, up 2.7 percentage points from the previous week (70.2%, revising down to 63.7% on final numbers).

This is the second highest preliminary clearance rate so far this year, behind the week ending 11th of February (73.1%).

Across the smaller auction markets, Adelaide recorded the highest preliminary clearance rate (84.7%), followed by Canberra (76.5%) and Brisbane (66.0%).

There were 131 auctions held across Brisbane, followed closely by Adelaide (126). Canberra saw 52 homes taken to auction, while there were just 13 auctions in Perth and three in Tasmania.

This week we are expecting to see around 2,060 homes taken to auction across the combined capital cities.

Our rental markets

Nationally, rents were up 0.8% in April, a slightly lower rate of growth relative to February and March when the national rental index rose 0.9% and 1.0% respectively.

Across the individual capitals, dwelling rents rose over the past three months in most cities, with Darwin recording the only fall.

Despite an uptick in gross rental yields, investors with a high amount of leverage are likely to be facing a negative cash flow on their property.