The new data on the housing market reveals that, at a macro level at least, values are still rising, but growth momentum is losing steam and conditions remain mixed quarter to quarter.
Housing values nationally climbed 1% in the September quarter, the lowest growth in the CoreLogic national home value index in a rolling three-month period since March of 2023, when the market was moving through the early phases of the current upswing. This once again shows how diverse housing conditions are.
Note: Several capital cities have experienced a fall in dwelling values, indicating a shift in the market dynamics.
Change in house prices, 12 months to September 2024:
Source: CoreLogic
While the overall slowdown continues, home values in Sydney are still on the rise but at a softer pace. On the other hand, mid-sized capitals continue to lose steam, as in Melbourne, where prices fell 1.1% down in Q3. Meanwhile, in Brisbane, Adelaide, and Perth, the latter was the highest with a 1.6% increase in SeptemberHousing Trends Across Capital Cities
While four capital cities recorded a fall in dwelling values through the September quarter, led by Melbourne where housing values are down 1.1%, Canberra, Hobart, and Darwin also recorded falls over the quarter.
Sydney home values have continued to rise, but the 0.5% increase through the September quarter was the lowest growth result since the three months ending February of 2023, when values were down by 0.3%. Even the growth conditions in the midsize capitals, which have led the pace of capital gains through most of the upswing, continue to significantly outpace other capitals as momentum is lost.
Rolling quarterly change in values, dwellings (Sydney, Melbourne, Brisbane, Adelaide):
- Also read:Melbourne housing market update | October 2024
- Also read:Sydney housing market update | October 2024
- Also read:Australian housing market update [CoreLogic’s video] | October 2024
- Also read:Latest property price forecasts for 2024 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:Everything you need to know about the state of Australia’s property markets in 20 charts – October 2024
Source: CoreLogic
Contributory factors toward the changing conditions of the market include increasing inventory in real estate. Homeowners are looking to sell; thus, there is an increase in the number of properties available to buyers, altering the balance between supply and demand to become more favorable to buyers, especially in Sydney with its rising listings. This is the strongest flow of newly advertised housing stock at this time of year since 2021.
The rental market has also continued to cool, with rental growth slowing nationally. This could be explained by a reduction in rental demand due to the decrease in net overseas migration over recent periods. So, it is an excellent time for tenants to find better positions in the current market.
The near-term outlook for housing markets points to an ongoing expansion in the value of housing. In fact, there are a number of constraint factors: profit margins squeezed, scarcity of trades, and competition—all place constraints on new housing supply. This all means the under-supply of newly built homes is likely to keep a floor under housing prices and rents well into next year.
An interest rate cut is in the wings, which should boost borrowing capacity and confidence for homebuyers. This is likely to spill into the housing market and drive further growth in housing values. Housing affordability, however, remains a concern across every metric—a nagging reminder that long-term solutions are required to fix this problem.
With the expectation of continued increases in real estate listings, arguably, it is a buyer's market with greater bargaining strengths. Curiously, the strongest growth out of all the stock levels is also the weakest for values. This set of factors may provide the best opportunities for buyers to find property at theoretically better prices.
