National Property Market Update | Dr. Andrew Wilson

Australian housing markets are providing early signs that the recent solid to strong growth in buyer activity and house prices may have peaked.

Although performances between markets and sub-markets remains typically mixed, prices growth generally is lower than that recorded over recent quarters.

The impact of historically low interest rates is now being offset by the strongest annual growth in house prices in 4 years for all capitals.

As a consequence the relatively high housing affordability that released pent-up demand is now declining which will likely provide a moderating effect on buyer activity through the remainder of 2014.

The Reserve Bank decided as expected to leave interest rates at the current settings again this month as signs continue to emerge of an improvement in economic activity. The national seasonally adjusted ABS unemployment rate fell to 5.8 percent over March reversing the recent rising trend of the past 4 months.

Although economic activity is showing early and gradual signs of improvement, performances are mixed between state economies and as a consequence official rates are set to remain on hold for the foreseeable future.


Sydney remains the standout performer of all capital city markets although signs are emerging of a tapering in activity.

Auction clearance rates have exceeded 80 percent on every weekend since the auction season started in earnest on February 1st.

Recent results have however indicated a slightly weakening trend reflecting the impact of record high auction listing numbers on the market over the past month.

Auction performances remain reasonably consistent between regions although recent indications that the budget market may be weakening are being offset by a strengthening of the prestige market.

The local economy continues to improve with the latest March unemployment rate for New South Wales falling sharply to 5.3 percent.

First home buyers remained sidelined in the market with ABS recording the proportion of this buyer group in the New South Wales market at near record lows. By contrast investors in New South Wales have surged to an all-time high of market share of 57 percent.


The Melbourne housing market is also showing early signs of weakening with the weekend auction clearance rate trend clearly falling over the past month.

Although the rate has remained reasonably solid above 70 percent, the market remains patchy.

Strong performances from the outer east suburbs are continuing and supported to a lesser degree by the inner bayside and inner east prestige regions, however other regional markets are steady at best.

Similar to Sydney, the Melbourne auction market has been characterised by a surge in listings which may be responsible for a recent slight weakening in clearance rates.

The ABS reported that the value of loans approved over February in Victoria fell by 1.6 percent over the month – another indication of market weakening. The number of owner-occupied dwelling sales financed over February also fell down by 3.4 percent to the lowest total since February 2013.

The local economy remains an impediment to continuing solid housing market activity with the Melbourne unemployment rate remaining steady at 7.3 percent over February – the highest rate since 1999.


Expectations remain that the Brisbane housing market will continue its steady revival through 2014 as the local economy improves.

Recent data supports this with the median house price over the February quarter rising by 1 percent for an increase of 5.6 percent over the year.

ABS loan data also supports the revival with the number of home loans approved for owner-occupier sales in Queensland rising by 9.9 percent over the month of February.

Investor activity is also on the rise with a big jump of 22.1 percent in loans to this group over the month.

The local economy however remains subdued with the latest unemployment rate for Brisbane spiking to a concerning 7.4 percent over February.


Adelaide’s median house price increased by an encouraging 1.5 percent over the three months ending February with that market continuing to record steady prices growth.

Home loan activity however weakened over February with the ABS reporting a fall in South Australia loan activity for dwellings of 1.4 percent over the month.

The economy remains a concern with ABS unemployment rising sharply to 7.5 percent over February – the highest of all the mainland capitals.


Perth house prices were flat over the February quarter but were 8 percent higher than over the February quarter 2013. Housing market activity in Perth has waned over recent months with the ABS reporting home loan activity down by 1.8 percent over February.

First home buyers however remain active in Western Australia with a rise of 4.5 percent in ABS home loans for this group of over February. Western Australia has the highest local market share for first home buyers of all the states at 21.9 percent

A flattening of housing market activity may be a response to the sharp deterioration in economic activity over recent months in Perth. The local unemployment rate increased to 6.3 percent over February although the ABS has reported a significant improvement in the Western Australian unemployment rate to 4.9 percent over March.


Hobart house prices were up by 1.9 percent over February as that city continues on its road to recovery.

Prices have now increased by 5.8 percent over the past year as confidence slowly returns to the market – despite the highest ABS unemployment rate of all capitals at 7.9 percent.


A solid local economic performance continues to drive Darwin house prices with an increase of 2.6 percent recorded over the February quarter – the best performance of all the capitals.

Darwin also has the the lowest unemployment rate of all the capitals at just 3.3 percent over February according to the ABS.


After showing some signs of improvement late last year, the Canberra market has deteriorated over February with house prices falling by 1.8 percent – the only negative result of all the capitals.

With the prospect of more job – shedding in the public service from the upcoming federal budget, buyer confidence is set to remain subdued in Canberra.

Gold Coast

The Gold Coast continues to show solid signs of improvement with house prices increasing by 1.4 percent over the February quarter.

The local economy has an emerging positive factor in market revival lately although the latest ABS unemployment rate of 7.2 percent over February is a significant deterioration from recent good results.



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Andrew Wilson


Dr Andrew Wilson, of is Australia’s leading property economist.

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