Key takeaways
Dwelling values increased a modest 0.4% in the first month of spring, broadly in line with the monthly change in July and August at 0.3% as momentum continues to leave the market.
Four capital cities recorded a fall in dwelling values through the September quarter, led by Melbourne where values were down 1.1%. Canberra, Hobart and Darwin also recorded declines over the quarter. Perth values were up 4.7%, Adelaide by 4.0% and Brisbane’s eased back to 2.7%.
The slowdown in the pace of growth comes as home owners increasingly look to sell. The flow of new listings coming onto the market was tracking 3.2% higher than a year ago nationally to be 8.8% higher than the previous five-year average for this time of the year.
Alongside the rise in real estate listings, we have also seen vendor metrics soften, signalling weaker selling conditions. Auction clearance rates have wound back to the low 60% range across the combined capital cities, which is about 4 percentage points below the decade average.
Affordability constraints and reduced borrowing capacity continue to support stronger conditions across housing markets with lower price points.
Looking at the rental market, the national rental index increased by just 0.1% over the September quarter, the smallest change over a rolling three-month period in four years.
Dwelling values increased a modest 0.4% in the first month of spring, broadly in line with the monthly change in July and August at 0.3% as momentum continues to leave the market.
Nationally, housing values rose 1.0% in the September quarter, the lowest rise in the national Home Value Index (HVI) over a rolling three-month period since March 2023 when the market was moving through the early phases of the current upswing.
| City | Month | Quarter | Annual | Total return | Median value |
|---|---|---|---|---|---|
| Sydney | 0.2% | 0.5% | 4.5% | 7.8% | $1,188,912 |
| Melbourne | -0.1% | -1.1% | -1.4% | 2.4% | $777,390 |
| Brisbane | 0.9% | 2.7% | 14.5% | 19.0% | $881,091 |
| Adelaide | 1.3% | 4.0% | 14.8% | 19.1% | $802,075 |
| Perth | 1.6% | 4.7% | 24.1% | 29.8% | $797,184 |
| Hobart | -0.4% | -0.8% | -1.1% | 2.9% | $654,302 |
| Darwin | 0.1% | -0.7% | 2.0% | 8.7% | $492,332 |
| Canberra | -0.3% | -0.9% | 0.7% | 4.9% | $844,882 |
| Combined capitals | 0.5% | 1.1% | 6.7% | 10.7% | $891,639 |
| Combined regional | 0.4% | 1.0% | 6.7% | 11.5% | $640,243 |
| National | 0.4% | 1.0% | 6.7% | 10.9% | $807,110 |
Source: Corelogic HVI 1st October 2024.
Demonstrating the diversity of housing conditions, four capital cities recorded a fall in dwelling values through the September quarter, led by Melbourne where values were down -1.1%.
Canberra, Hobart and Darwin also recorded declines over the quarter.
Sydney home values have continued to rise however the 0.5% increase through the September quarter was the lowest growth result since the three months ending February 2023 when values were down -0.3%.
The mid-sized capitals, which have led the pace of capital gains through most of the upswing, are also losing momentum, although growth continues to outpace other capitals significantly.
Perth values were up 4.7% through Q3, easing from 6.2% in the June quarter.
The quarterly gains in Adelaide look to be topping out with a 4.0% rise through the quarter and Brisbane’s quarterly growth has eased back to 2.7%, the lowest rise over a rolling three-month period since April last year.
The slowdown in the pace of growth comes as homeowners increasingly look to sell
The flow of new listings coming onto the market was tracking 3.2% higher than a year ago nationally to be 8.8% higher than the previous five-year average for this time of the year.
The rise in real estate inventory is a seasonal trend, with spring and early summer being one of the busiest periods of the year for selling.
However, the flow of freshly advertised housing stock hasn’t been this high at this time of the year since 2021.
Alongside the rise in real estate listings, we have also seen vendor metrics soften, signalling weaker selling conditions.
Auction clearance rates have wound back to the low 60% range across the combined capital cities, which is about 4 percentage points below the decade average.
Similarly, homes sold by private treaty are staying on the market longer, with a median of 32 days to sell nationally through the September quarter, up from 29 days in the June quarter and 27 days a year ago.
Affordability constraints and reduced borrowing capacity continue to support stronger conditions across housing markets with lower price points
Across the combined capitals, lower quartile dwelling values have increased by 12.4% over the past twelve months compared with a 3.8% rise in values across the upper quartile.
This trend is evident, to different extents, across every capital city except the ACT and Darwin, which are also the most affordable markets after adjusting for local household incomes.
Similarly, six of the eight capitals have seen unit values rise by more than house values, or in the case of Melbourne, record a smaller decline, over the September quarter.
Growth conditions across regional housing markets have also eased, with the quarterly trend in the combined regionals index reducing from 2.3% in the three months ending April to 1.7% in the June quarter, and more recently to 1.0% over the September quarter.
- Also read:Sydney housing market update | October 2024
- Also read:Vacancy Rates Fall back to 1.2% | SQM Research
- Also read:Australian housing market update [CoreLogic’s video] | October 2024
- Also read:We’re Not Building Enough Homes! Australia’s Building Crisis Will Impact You Sooner Than You Think! | Property Insiders
- Also read:This week’s Australian Property Market Update – Latest Data, State by State October 15th 2024
Similar to the capital city trends, growth across the regional parts of WA (+3.6% Sep quarter), SA (+2.3%) and Queensland (+2.0%) are leading the regional housing trends.
| Onset of Covid to September 2024(%) |
$ | Δ from peak to September 2024 | Series peak to date | |
| Sydney | 29.2% | $268,627 | <at peak> | <at peak> |
| Melbourne | 9.9% | $70,190 | -5.1% | 22-Mar |
| Brisbane | 66.4% | $351,613 | <at peak> | <at peak> |
| Adelaide | 69.0% | $327,581 | <at peak> | <at peak> |
| Perth | 74.6% | $340,720 | <at peak> | <at peak> |
| Hobart | 26.9% | $138,668 | -12.5% | 22-Mar |
| Darwin | 25.3% | $99,537 | -6.0% | 14-May |
| Canberra | 30.8% | $198,773 | -6.0% | 22-May |
| Regional NSW | 49.2% | $244,295 | -2.8% | 22-May |
| Regional VIC | 30.8% | $132,252 | -8.4% | 22-May |
| Regional QLD | 66.2% | $267,551 | <at peak> | <at peak> |
| Regional SA | 66.0% | $173,228 | <at peak> | <at peak> |
| Regional WA | 71.0% | $220,646 | <at peak> | <at peak> |
| Regional TAS | 45.9% | $162,584 | -4.0% | 22-May |
| Combined capitals | 34.1% | $226,976 | <at peak> | <at peak> |
| Combined regional | 53.7% | $223,558 | <at peak> | <at peak> |
| National | 38.3% | $223,417 | <at peak> | <at peak> |
The Outlook:
The immediate outlook for housing markets is for further growth in housing values, at least at the macro level, but a continuation in the gradual loss of momentum and increasing diversity across the cities and regions.
Upside factors for housing conditions include improving sentiment amid a slowdown in inflation, tight labour markets and a consensus that the next move in interest rates will be cut.
Household balance sheets are also benefitting from tax cuts and energy rebates that could help to lift sentiment and borrowing capacity, while real income growth would be supported by a further slowdown in inflation.
Additionally, constraints on new housing supply look to be entrenched due to squeezed profit margins for builders, scarcity of trades and significant competition with the public infrastructure sector.
An ongoing under-supply of newly built homes will naturally keep a floor under housing prices and rents.
A cut to interest rates is looking likely either early next year or even late this year, which will provide a boost to borrowing capacity and should help to support a further lift in confidence for households to make high-commitment decisions like buying a home.
However, other downside factors may at least partially offset these upsides.
Housing remains unaffordable across every metric.
The portion of household income required to service a new mortgage for the median income household was at record highs in the June quarter at 50.3%.
The dwelling value to income ratio, at 7.9, is only marginally lower than record highs and it would take 10.6 years for a household on the median income to save a 20% deposit to buy the median value dwelling (if they can save 15% of their income each year).
While lower interest rates will help to improve serviceability, mortgage rates or housing values would need to come down significantly, or incomes rise substantially, before affordability metrics return close to average levels.
A tightening of credit supply could be a downside risk for housing activity.
As highlighted in the September Financial Stability Review, the RBA sees residential property as a key sector where “domestic vulnerabilities could increase if households take on excessive levels of debt”.
Lending standards are likely to be closely monitored once the rate- cutting cycle commences.
A further rise in real estate listings should provide buyers with some additional leverage at the negotiation table.
A rise in advertised supply is already dampening selling conditions, and there is a good chance listing numbers will rise further through spring and early summer.
If the first month of spring is anything to go by, purchasing activity isn’t keeping pace with the flow of new listings.
Markets, where stock levels have lifted the most, are unsurprisingly the weakest from a values perspective.
A further rise in advertised supply is good news for buyers, but for vendors, it means more competition and the potential for a softening in selling conditions.
