July marks 18th consecutive month of Australian property price growth
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Australian home values have been boosted by +13.5 per cent since January 2023 according to CoreLogic's latest report.
The year-and-a-half of steady growth has seen national price records being broken on a monthly basis, but there is a growing diversity between overperforming and underperforming markets.
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Australian property prices: July 2024
The median Australian property value increased by +0.5 per cent in July to within touching distance of $800,000.
However, three cities are responsible for much of the growth seen over the past year.
| Market | Month | Quarter | Annual | Median value |
|---|---|---|---|---|
| Sydney | 0.3% | 1.1% | 5.6% | $1,174,867 |
| Melbourne | -0.4% | -0.9% | 0.2% | $781,949 |
| Brisbane | 1.1% | 3.8% | 16.0% | $873,987 |
| Adelaide | 1.8% | 5.0% | 15.5% | $776,597 |
| Perth | 2.0% | 6.2% | 24.7% | $773,335 |
| Hobart | -0.5% | -0.8% | -1.2% | $646,863 |
| Darwin | -0.2% | -0.3% | 2.3% | $507,097 |
| Canberra | 0.0% | 0.5% | 1.7% | $870,910 |
| Combined capitals | 0.5% | 1.8% | 7.9% | $884,412 |
| Combined regional | 0.4% | 1.3% | 6.9% | $630,565 |
| Australia | 0.5% | 1.7% | 7.6% | $798,207 |
July saw a slight softening of conditions in our two largest cities as Sydney prices rose +0.3 per cent and Melbourne's dipped -0.4 per cent.
Brisbane maintained growth of above +1.0 per cent while Adelaide and Perth continued to boom with remarkable gains of +1.8 per cent and +2.0 per cent respectively.
The smaller capitals cooled off by comparison as prices in Hobart and Darwin experienced modest declines and Canberra held flat for the month.
Regional markets mirrored the same hierarchy with Western Australia and South Australia leading the pack.
CoreLogic's report stated that "while the headline growth rate remains positive, it is clear momentum is leaving the cycle and conditions are becoming more diverse.
"These dynamics are weighing on growth in national home values, which are up +1.7 per cent in the past three months compared to the +3.2 per cent increase seen this time last year."
Three key takeaways from the current market
A number of 2024 property trends have become more firmly entrenched while other shifts are now just emerging. Here are the headline issues worth tracking.
Varying levels of supply are driving varying rates of growth
The divide between the performance of different markets has become wider as 2024 has unfolded. A key reason for that is the amount of stock that's available for buyers to compete over.
CoreLogic's research director Tim Lawless summarised by saying "The number of homes for sale in Brisbane, Adelaide and Perth is more than 30 per cent below average for this time of the year, while weaker markets like Melbourne and Hobart are recording advertised supply well above average levels."
Having such a shortage of listings in the three top-performing capitals means demand is vastly outstripping supply, pushing prices higher and higher and making for strong seller's markets.
Units are broadly outperforming houses once again
Affordability has been a persistent topic in recent years, particularly since high interest rates have put a squeeze on how much buyers are able to borrow.
That's led to the overperformance of cheaper, more affordable properties around much of the country. Looking nationally, the lower quartile of homes (ie. the cheapest 25 per cent) have gained +3.3 per cent in the past three months compared to just +0.8 per cent for the upper quartile.
Being the more accessible housing option, units are now outpacing houses in most markets as buyers seek out better value.
"Most cities now have a median house value that is at least 1.5 times higher than the median unit value. With stretched housing affordability, lower borrowing capacity and a lift in both investor and first home buyer activity, it’s not surprising to see the unit sector outperforming for a change," Mr Lawless said.
Investor activity is on the rise
Rising interest rates initially had investors acting with caution, but as CoreLogic's report put it, investors are now "taking a larger share of demand."
The latest ABS lending data shows that the number of investor loans are up nearly +25 per cent on the previous year, with activity in Western Australia surging by +53 per cent.
"Investor demand tends to seek out capital growth, so it’s no surprise to see such an upswing in markets like Western Australia and Queensland where values are rising rapidly and yields tend to be higher than the larger capitals," Mr Lawless explained.
"However, the share of investment demand is well above average at a time when rental yields are tracking substantially lower than mortgage rates, implying a rising number of investors are likely to be experiencing a cash flow loss, especially if they are highly leveraged."
What's next for Australian property?
The broad shortage of listings in the face of strong demand has again been a key driver of price growth in 2024, but CoreLogic noted that "there does seem to be some rebalancing underway."
While supply remains exceedingly tight in cities like Perth and Adelaide, listings are now "well above average" in Melbourne and Hobart, and they're "normalising" in Sydney, which is serving to cool those markets in particular.
But a lack of new builds is still contributing to a widespread undersupply as what developments are currently in the pipeline are "insufficient relative to population growth."
The topic of interest rates is still a live one, but the latest inflation data looks more promising in regards to the RBA's next move on the cash rate will be to cut rather than hike.
Westpac chief economist Luci Ellis told the SMH that "Another quarter of inflation data should be enough to convince the RBA board that disinflation is on track and that inflation will be back into the target range on the desired timetable.
"That would lead the board to the conclusion that monetary policy does not need to be as tight as it currently is for much longer."
Looking ahead, CoreLogic concluded that "constraints on new housing supply are likely to keep a floor under home prices and remain a feature of the market for some time yet," although affordability pressures remain a national concern.
We may continue to see the lower end of the market outperform as buyers seek out more achievable property purchases in the high interest rate environment.
