By Michael Yardney May 13, 2024

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This week’s Australian Property Market Update – Latest Data, State by State May 14th 2024

Property Market News
This week’s Australian Property Market Update – Latest Data, State by State May 14th 2024

Key takeaways

Australian home values continued to trend higher in April with CoreLogic’s national Home Value Index (HVI) rising 0.6%.

April’s increase takes the current growth cycle into its 15th month, with housing values up 11.1% or approximately $78,000 since the trough in January last year.

It was no surprise that last week the Reserve Bank held the cash rate steady at 4.35%. Interest rates look set remain higher for longer with the timing of the potential rate cut having been pushed out to late this year or even early next year.

However federal budget forecasts have delivered a surprise bonus, revealing inflation is falling faster than predicted. Treasury predictions in the budget, which will be handed down on Tuesday, show inflation dropping to 2.75 per cent by December.

Last weekend's auction results confirmed the strength and the depth of our property markets - the preliminary auction clearance rate reported by Corelogic stepped a little higher last week, rising to 73.5% across the combined capitals, up from a preliminary rate of 72.9% the week prior which revised lower to 66.1% once finalised.

Sydney continued to standout with a strong preliminary clearance rate at 78.1%, although this was slightly lower than the previous week at 78.3% (71.0% on final numbers).

Melbourne’searly clearance rate rose above the 70% mark to 71.0%, slightly higher than the previous week’s 69.8% (62.5% on finalised numbers).

The result was on the back of a large volume, with 1,026 auctions held, the first 1,000+ week of auctions since the week prior to Easter.

Sydney property prices increased 0.1% over the last week, increased 0.4% over the last month and are 8.2% higher than they were 12 months ago.

Melbourne property prices remained flat over the last week, dropped -0.1% over the last month, and are 2.4% higher than they were 12 months ago.

Brisbane property prices increased by 0.4% over the last week, increased 1.1% over the last month and are 16.0% higher than they were 12 months ago.

Overall, Australian capital dwelling prices increased by 0.6% 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.

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 out demand.

It's old news now that the Reserve Bank held the cash rate steady at 4.35% at its May meeting.

Interest rates look set to remain higher for longer, with the timing of potential rate cuts having been pushed out and remaining uncertain.

Higher-than-expected inflation in the March quarter confirmed the challenging journey towards lower inflation, but the RBA board remains forward looking, anticipating a further decline in inflation by the end of the year with policy remaining tight. As a result, for now, they deem cash rate appropriate.

However federal budget forecasts have delivered a surprise bonus, revealing inflation is falling faster than predicted.

Treasury predictions in the budget, which will be handed down on Tuesday, show inflation dropping to 2.75 per cent by December.

The forecasts also show inflation remaining at 2.75 per cent by the middle of 2025, before a further drop to 2.5 per cent by the end of that year.

The modelling in the budget shows inflation falling back to within the Reserve Bank of Australia’s target range of 2 to 3 per cent, almost a year earlier than the bank had forecast at its May meeting.

On the other hand, unemployment is expected to rise from 3.8 per cent to 4.5 per cent over the next 12 months.

We will have to see what the budget brings, but economists warned that budget handouts and subsidies to bring down power bills or rents would put extra cash into people’s pockets, adding to consumer demand and medium-term inflationary pressures, working against the RBA.

In the meantime, despite the challenges of cost-of-living pressures and high interest rates, property prices just keep rising.

The depth of demand for housing keeps showing itself every weekend as auction clearance rates keep holding up despite more properties being offered for sale.

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

The volume of capital city auctions remained above the 2,000 mark for the second week running, with 2,168 properties going under the hammer last weekend.

The number of auctions was down 1.5% on the previous week (2,202) but 28% higher than at the same time last year (1,692).

The preliminary clearance rate, at 72.6%, was the lowest since the Easter long weekend with the largest auction markets weighing on the early result, but this is still a very respectable result.

See Corelogic's full auction report below.

This week, CoreLogic reports that:

Sydney property prices increased 0.1% over the last week, increased 0.4% over the last month and are 8.2% higher than they were 12 months ago.

Melbourne property prices remained flat over the last week, dropped -0.1% over the last month, and are 2.4% higher than they were 12 months ago.
Brisbane property prices increased by 0.4% over the last week, increased 1.1% over the last month and are 16.0% higher than they were 12 months ago.

Overall, Australian capital dwelling prices increased by 0.6% over the last month and are now 9.4% higher than they were 12 months ago.

Clearly, the property cycle is moving on driven by an undersupply of good properties relative to steady demand from buyers.

Source: CoreLogic May 13th 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.

The more expensive parts of our capital cities are likely to outperform this year as the local residence will, in general, have more equity in the properties they are selling, and they won't be as sensitive to high interest rates and the high cost of living as the outer and new suburbs.

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 13th May 2024 provided by CoreLogic, and realestate.com.au.

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 for May 2024.

Sydney

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,914.791	20.097	0.6%	8.5%
All Units	803.313	-3.913	1.4%	4.9%
Combined	1,466.775	10.042	0.7%	7.3%

Source: SQM Research

Melbourne

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,253.222	-3.022	-0.7%	7.1%
All Units	604.701	-0.821	-0.2%	2.5%
Combined	1,050.608	-2.546	-0.6%	6.0%

Source: SQM Research

Brisbane

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,096.727	1.868	1.7%	15.4%
All Units	605.425	-0.825	1.4%	19.0%
Combined	974.379	1.123	1.7%	15.8%

Source: SQM Research

Perth

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	980.946	0.228	1.0%	17.2%
All Units	508.104	1.346	0.2%	16.5%
Combined	857.996	0.431	0.9%	16.9%

Source: SQM Research

Adelaide

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	906.115	10.784	2.6%	16.5%
All Units	458.064	-4.664	2.4%	13.3%
Combined	827.750	8.004	2.6%	16.2%

Source: SQM Research

Canberra

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,183.536	7.326	0.5%	13.8%
All Units	593.554	-0.567	-0.5%	0.6%
Combined	969.278	4.071	0.2%	10.2%

Source: SQM Research

Darwin

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	663.319	5.481	-1.0%	-2.2%
All Units	367.646	-0.980	-1.0%	-3.3%
Combined	547.311	2.910	-1.0%	-2.5%

Source: SQM Research

Hobart

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	788.909	-2.364	-0.7%	-0.8%
All Units	530.899	4.737	5.9%	-1.2%
Combined	750.084	-1.331	0.0%	-0.9%

Source: SQM Research

National

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	918.949	0.585	0.2%	11.0%
All Units	539.917	1.320	0.2%	5.1%
Combined	837.876	0.675	0.2%	10.1%

Source: SQM Research

Cap City Average

Property type	Price ($)	Weekly Change	Monthly Change %	Annual % change
All Houses	1,375.815	12.174	1.0%	10.7%
All Units	673.854	-8.438	0.7%	5.4%
Combined	1,169.418	5.907	0.9%	9.5%

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

Lowest preliminary auction clearance rate since Easter long weekend

The volume of capital city auctions remained above the 2,000 mark for the second week running, with 2,168 properties going under the hammer last week.

The number of auctions was down 1.5% on the previous week (2,202) but 28% higher than at the same time last year (1,692).

The preliminary clearance rate, at 72.6%, was the lowest since the Easter long weekend with the largest auction markets weighing on the early result.

Sydney’s preliminary clearance rate fell from 78.1% over the previous week to 75.9% and Melbourne’s preliminary clearance rate fell from 71.0% to 68.0%.

The smaller auction markets strengthened, with Adelaide’s preliminary clearance rate rising to 91.7% (second highest result so far this year), Brisbane’s early clearance rate rising to 76.7% and Canberra breaking the 70% mark (71.4%) for the first time since the week before Easter.

Finalised auction clearance rates have faded a little from earlier in the year, holding roughly around the decade average of 65.1% (the previous week saw a finalised clearance rate of 65.9%).

With the average revision between the preliminary and finalised capital city clearance rate tracking at 7.5 percentage points, we are likely to see last week’s final clearance rate once again in line with the long-run average.

We are expecting another 2,000+ week of auctions this week, with around 2,100 homes currently scheduled to go under the hammer.

More broadly, the trend in new capital city listings has also picked up a little with the flow of freshly advertised stock coming to market tracking almost 17% higher than at the same time last year and 12.7% above the previous five-year average.

Despite the rise in fresh listings, total advertised inventory is holding firm to be 4.0% lower than a year ago and 16.3% below the previous five-year average.

City	Clearance Rate	Total Auctions	CoreLogic auction results	Cleared Auctions	Uncleared Auctions
Sydney	75.9%	753	572	434	138
Melbourne	68.0%	1,066	776	528	248
Brisbane	76.7%	152	103	79	24
Adelaide	91.7%	115	60	55	5
Perth	n/a	11	8	4	4
Tasmania	n/a	2	0	0	0
Canberra	71.4%	69	35	25	10
Weighted Average	72.6%	2,168	1,554	1,125	429

Source: CoreLogic

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.