Australian property gains $59k in FY24 as growth continues

With the 2023-24 financial year coming to an end, a look back at the past 12 months shows very strong results for Australian property. 

CoreLogic's latest report found the national median dwelling value jumped up by $59,000 to $794,000 over the financial year, a major shift from the declines of FY2022-23.

Will the latest run of consistency continue or are our markets in for another shift in the near future?

National property prices: June 2024

The median Australian home value jumped up another +0.7 per cent in June, bringing the total annual gains up to +8.0 per cent. 

So far this year, each capital city is maintaining a relatively stable path forward. 

Sydney prices jumped another +0.5 per cent for the month while Melbourne was slightly down by -0.2 per cent. 

Brisbane and Adelaide both carried strong momentum forward with rises of +1.2 per cent and +1.7 per cent respectively, with Perth again taking out the top spot with another huge +2.0 per cent increase. 

Hobart, Darwin and Canberra all held near flat levels without loss and regional markets remained close to their capital city counterparts with an overall uplift of +0.6 per cent. 

CoreLogic's research director Tim Lawless noted that most markets around the country look to have settled into a steady rhythm since the start of 2024. 

"The persistent growth comes despite an array of downside risks including high rates, cost of living pressures, affordability challenges and tight credit policy," he said. 

"The housing market resilience comes back to tight supply levels which are keeping upwards pressure on values.”

Three key takeaways from the current market

A number of 2024 property trends have become more firmly entrenched as the year has unfolded, while other shifts are now just emerging. Here are the headline issues worth tracking. 

Severe stock shortages are driving the leading markets

The split between the country's best-performing markets (Perth, Adelaide and Brisbane) and the rest of the capital cities continues to be largely driven by a major imbalance between supply and demand. 

Over June, new Perth listings were -47 per cent below the five-year average. That number was -43 per cent for Adelaide and -34 per cent for Brisbane. 

By contrast, home sales in Perth were +29 per cent higher than average levels, exemplifying the vast gap between limited supply versus heightened demand. 

Sales volumes are up in most markets year-on-year, especially in Sydney, so buyers are broadly active and look to be absorbing what new stock does come onto the market. 

But it's the cities where demand is far outweighing supply that prices are continuing to surge. 

Interest rates are back in the spotlight

In the earlier months of 2024, the conversation around interest rates was focused solely on how soon cuts might arrive. 

Incoming inflation data for April and May has shown that inflation is proving stickier than the RBA had hoped, creating concerns of higher-for-longer rates or even another hike. 

The good news is that, for now, the big four banks along with a range of economists are still predicting the next time rates move it will be in a downward direction. 

But Westpac Business Bank's Chief Economist Besa Deda said that the bad news is most likely having to wait longer for rate cuts rather than the expectation of an increase. 

"Our inflation forecasts for the upcoming June quarter report are below that of the RBA’s, leaving us comfortable with our view that the next move in the cash rate will be down and arrive in November," she explained.  

"But we acknowledge there’s a greater risk of rate relief slipping into next year."

Regional markets continue to hold strong against the capitals

After having a softer year in 2023 relative to the capital cities, Australia's regional markets are back on par with their metropolitan counterparts.

CoreLogic's Kaytlin Ezzy said in their latest regional market update that "regional home values have seen a slower recovery compared to capital city values but have now regained the losses from the downturn to reach a new record high."

Monthly price growth in the regions has closely matched the capitals since the beginning of this year, showing that demand remains strong outside of the country's most populous areas.

There is, however, a similar level of disparity between states as there is across the capital cities. 

Prices are at record highs in regional WA, SA and Queensland while annual growth is close to flat in regional Victoria and Tasmania. NSW sits somewhere in the middle with annual gains of +4.1 per cent. 

What's next for Australian property? 

With the uncertain future of interest rates finding its way back into the headlines, the RBA's decisions over the next six months could have a big impact on what happens next for Australian housing. 

While expectations are still skewed towards rates holding before a cut late in 2024 or early in 2025, CoreLogic's Eliza Owen suggested the ongoing financial pressures people are under may serve to dampen the market. 

"Even if rates do not increase further, housing purchases are expected to slow as economic conditions become weaker and affordability constraints play out," she said. 

But Mr Lawless pointed out that the widespread undersupply of housing, which includes new and existing listings as well as new developments, remains a driver of the upward growth we've seen throughout 2024. 

"Each of these components remain insufficient to varying degrees to cater for housing demand, which is why we are seeing values persistently rising at a time when interest rates and inflationary pressures are high, sentiment is deeply pessimistic and credit policy is tight," he said. 

While new listings are beginning to increase, they're being absorbed by buyers at a rapid rate, keeping supply tight across most markets. 

“Although the risks facing the housing sector are growing, we are still expecting home values to rise, at least into the near term.”

"Until supply and demand rebalance there is likely to be further upwards pressure on home values."