A cooling market as we head into the warmer months

Australia’s property market is finishing the year showing a softening in prices with annual growth in national home values continuing to ease, reducing to 5.5 per cent over the 12 months ending November, down from a recent peak annual growth rate of 9.7 per cent in February.

CoreLogic’s national Home Value Index (HVI) has reported a quarterly increase of 0.5 per cent, compared to around 2 per cent the same time last year. In line with a softening market the HVI recorded a monthly movement of just 0.1 per cent - the smallest monthly gain since the growth cycle commenced in February last year. The median dwelling price in Australia now sits at $812,933, up from the same time last year at $753,654.

The weak positive movement over the quarter was supported by the mid-sized capitals, led by Perth, followed by Adelaide and Brisbane, offsetting declines in Darwin, Canberra, Melbourne and Sydney.

Increased stock levels contributing to lower growth

A rise in advertised stock levels has contributed to lower growth in home values, particularly in the weakest markets. Advertised listings have increased around 16 per cent since the end of winter across the combined capitals, with Perth (+33 per cent) and Adelaide (+25 per cent) recording the largest lift in advertised stock levels through the spring season, albeit from an extremely low base.

Alongside the rise in advertised supply, the number of home sales is declining. With higher levels of advertised supply and less purchasing activity, selling conditions have loosened. 

The outlook

The housing outlook is likely to continue to be impacted by rising advertised stock levels and a slowdown in purchasing activity.

Interest rates appear to be on hold for the medium term. The October inflation indicator came in at a healthy 2.1 per cent for October, well inside the RBA’s 2-3 per cent target range; but the RBA will be looking through the headline results and focusing on the core inflation outcome, which unfortunately moved in the wrong direction in October. 

One positive is labour markets are holding tight, with the unemployment rates holding at around 4 per cent for the past couple of months. Additionally, low levels of new housing supply will persist into the near future.

On the downside, affordability challenges continue to be felt across most sectors of the housing market. Economic activity is soft, and households have largely drawn down their savings buffers accrued through the pandemic. Looking at affordability measures, debt servicing ratios were at a record high in the last quarter and dwelling values relative to household incomes were also close to record highs.

Dwelling values over the quarter 

Melbourne

The Victorian capital posted a -0.4 per cent quarterly move according to CoreLogic figures, taking the city’s median dwelling price to $776,949. Investors should take note that the gross rental yield figure for Melbourne now sits at 3.7 per cent.

Sydney

In the three months to October’s end, Sydney experienced a very subtle dwelling value change of –0.5 per cent resulting in a median of $1.196 million. The gross rental yield for the Harbour City is currently the lowest of the capitals at 3.0 per cent.

Brisbane

The Queensland capital has again recorded the second most expensive spot for dwelling values at $886,540, although growth is softening after a quarterly rise of 1.8 per cent. Brisbane has recorded a gross rental yield of 3.7 per cent.

Canberra

The national capital recorded a decline of -0.3 per cent during the quarter with the median now sitting at $851,731. For Canberra, the gross rental yield is 4.0 per cent.

Perth

Continuing its lead as the best-performing capital over the quarter, Perth jumped 3 per cent in three months taking its medium to $808,090. Perth recorded 4.2 per cent gross rental yield. 

For more information about how you might be able to purchase a property in the current market, get in touch with us today. 

Note: all figures in the city snapshots are sourced from: CoreLogic’s national Home Value Index (November 2024)