Listings finally increase but home prices continue to climb in July

July saw Australian property prices grow for the fifth consecutive month despite a long-awaited boost in new listings, CoreLogic's latest report shows. 

Even with fresh stock coming to the market, buyer demand has been more than enough to push values even higher in almost every city. 

With the spring selling season just around the corner, can price growth be reeled in? 

National property prices: July 2023

Australia's median home price jumped up another +0.7 per cent in July, bringing the total for this run of monthly gains up to +4.1 per cent. 

Sydney's growth decelerated slightly but still returned a strong +0.9 per cent increase for the month, while Melbourne saw modest gains of +0.3 per cent. 

Brisbane and Adelaide both enjoyed significant jumps of +1.4 per cent apiece, bringing Adelaide prices to new all-time highs. Perth also found a new peak level with a +1.0 per cent boost. 

Hobart continued to hold flat throughout July and Canberra declined just -0.1 per cent. Darwin also stayed more or less steady at +0.3 per cent for the month. 

Regional markets once again saw more subdued growth with a combined change of +0.2 per cent. 

CoreLogic's head of research, Tim Lawless, noted that more entry-level properties are currently spurring on price growth. 

"Some resilience in growth across the middle and more affordable end of the market aligns with housing finance data which has shown a stronger bounce back in the value of lending to first home buyers and investors over recent months," he said. 

"These segments tend to be more active across the middle to lower end of the pricing range where competition to purchase a home may be more intense."

The new listings drought is ending but buyer demand is rising

For the best part of a year, a severe shortage of listings has stoked buyer competition and eventually led to the return of strong growth we've seen throughout 2023. 

Now, finally, there has been a marked increase in new stock coming to the market as sellers have looked to capitalise on rising home values. 

New listings in July were slightly above the five-year average, indicating a particularly active winter, however total listings on the market remained well below average levels. 

"With total stock levels still low and selling conditions reasonably strong, it may be the case that more homeowners are picking current market conditions as a good time to sell," Mr Lawless explained.

~"The fact that total stock levels are still trending lower implies demand is keeping up with the increased flow of new listings coming to market."

He speculated that the rise in new listings could be attributed to a combination of sellers looking to beat the spring selling rush along with the early signs of a rise in motivated sales due to rising interest rates. 

"If we do see the volume of listings increase further, which is likely as we approach spring, that could take some further heat out of the market unless that is offset by a more substantial lift in active buyers."

Interest rates may have already peaked

The RBA's second consecutive decision to pause the cash rate this week could indicate that the tightening cycle is over. 

Westpac, ANZ and CBA are now all predicting the cash rate will remain at 4.10 per cent, while NAB believes there is still a 50-50 chance of one further hike to 4.35 per cent in November. 

All four of the big banks then expect rates will start being cut back in the latter half of 2024. 

Rising rates were the key driver in Australia's property price correction last year, and it had been speculated that any further hikes above 4 per cent would put the brakes on more growth in 2023.

"For the housing sector, the decision to hold interest rates over the past two months is positive news," Mr Lawless said.

"A growing expectation that interest rates have peaked, or are near a peak, should help to lift consumer sentiment from the recession-like lows that have persisted over the past nine months."

He concluded that "any lift in sentiment is likely to be accompanied by a rise in active buyers and sellers."

What's next for Australian property?

With the looming threat of further rate hikes finally easing, all eyes will be on listing levels as we move towards the spring selling season. 

"With an increase in the flow of fresh listings coming to market, we could gradually see the supply side becoming more balanced if housing demand doesn’t pick up at the same pace," Mr Lawless explained. 

"To date, the rise in new listings has been absorbed, with total stock levels remaining well below average, but this will be a trend to watch."

There are strong indicators so far that buyer demand is growing in step with rising listings, helped out by above-average levels of overseas migration and an ongoing shortage of new-build properties. 

It's also looking less likely that an influx of distressed sales will hit the market, partly due to the interest rate ceiling potentially being hit and partly due to strong unemployment numbers. 

Overall, it paints a picture of a market that's unlikely to see a return to price declines any time soon, with sellers remaining in a strong position.