Australia’s property market reaches total value of $11 trillion

Australia’s property market reaches total value of $11 trillion

Australia’s property market has reached a new milestone, with the total value of residential real estate climbing to $11 trillion for the first time, increasing by $900 billion over the past 12 months, according to CoreLogic’s October Monthly Housing Chart Pack.

Despite this growth, national home values rose by just 1.0% in the September quarter, the softest quarterly rise since March 2023. The annual growth rate has also slowed to 6.7% from a high of 9.7% earlier in the year, indicative of a cooling market.

CoreLogic Australia Economist Kaytlin Ezzy attributed the slowdown in price growth to increased listing volumes and more cautious buyer behaviour.

Figures show Perth values reached a new record high and experienced the highest annual growth of 24.1%, driven by sustained demand and limited supply. Sydney, Brisbane, and Adelaide dwelling values are also at record highs.

Brisbane recorded an annual increase of 14.5%, Adelaide values rose by 14.8% and Sydney values increased 4.5% in the 12 months to September.

Melbourne and Hobart recorded quarterly and annual dwelling declines and are -5.1% and -12.5% respectively below their record highs recorded in March 2022.

Regional housing markets experienced a quarterly increase of 1.0%, down from 2.3% in the three months to April, a similar deceleration to that seen in the capital cities.

“While the market remains resilient in many areas, the pace of growth more broadly has clearly decelerated. Buyers and investors are becoming more cautious, and the current lending environment is leading to more measured purchasing decisions,” Ms Ezzy said.

Impacting values has been a surge in new listing volumes, which rose 2.1% year-on-year in October 6th, marking the strongest start to the spring selling season since 2021.

Total sales volumes, however, have declined slightly from the previous 12 months, though sales activity remains 10.5% higher than this time last year.

“The year-on-year increase in new listing volumes will have contributed to a deceleration in value growth as the market absorbs the additional stock. The higher rate of sales indicates there’s still solid buyer demand despite changing market conditions,” Ms Ezzy said.

“As we move through spring, we’re likely to see further moderation in value growth as new listings continue to rise, providing some relief for buyers who have faced intense competition over the past year.”

Investors represent a significant proportion of the strong buyer demand, making up 38.6% of new loan commitments, the highest share since 2017.

The heightened activity comes as the national rental growth slows, with rents rising 0.1% over the quarter, the lowest rate in four years. Gross rental yields have compressed to 3.68%, down from 4.1% a year earlier, indicating affordability constraints for tenants.

Ms Ezzy said the high investor activity is likely due to a combination of factors, including perceived opportunities for capital gains and tighter rental market conditions driving potential yield growth.

“Along with capital gains, some investors are recognising the potential for long-term rental income growth, even as rental yields compress. The increase in available stock is also providing more opportunities for investors to enter the market, which wasn’t the case during last year’s constrained conditions,” she said.

“However, this trend could intensify competition for other buyer groups, such as first-home buyers, who remain active in the market. This increased investor activity could place further pressure on already limited supply levels, particularly in capital cities.”

Highlights from the October 2024 Housing Chart Pack include:

• CoreLogic estimates the combined value of residential real estate rose to $11 trillion at the end of September.
• National home values eased to 1.0% over the September quarter, the softest quarterly rise since the three months to March 2023.
• Sydney, Brisbane, Adelaide and Perth dwelling values are all currently at a record high. Perth had the highest monthly, quarterly and annual dwelling value increase while Adelaide has overtaken Brisbane as the second strongest capital city market nationally.
• CoreLogic estimates 522,317 sales occurred in the 12 months to September, down from 524,442 in the year to August. Despite the month-on-month decline, transactions are 10.5% higher than last year and 6.5% above the five-year average.
• Days on market has increased to 32 days in the three months to September, up from a low of 29 days in Q2. Longer selling times in Hobart (52), Darwin (49) and Canberra (45) are contributing to the increase.
• Vendor discounting remained steady at -3.7%, reflecting market conditions and a vendor’s requirement to negotiate to secure a sale.
• New listings totalled 42,479, 2.1% higher than the same time last year and 8.2% above the historic five-year average. It’s the highest level of new listings in the first month of spring since 2021.
• The recent flow of new listings has seen total listings rise to 145,450 in the four weeks to 6 October 2024.
• Sydney (3.7%), Brisbane (12.1%) and Perth (9.4%) have all seen a stronger flow of new listings over the four weeks to 6 October compared to the same time last year.
• Total listings in Brisbane are now 4.2% higher than this time last year, while advertised supply in Sydney and Melbourne is 6.9% and 7.9% higher, respectively.
• Capital cities recorded their lowest clearance rate of the year at 60.6% in late September, below the 10-year average of 65.5%.
• Annual growth in rent values slowed to 6.8% nationally, down from a recent high of 8.5% over the year to April.

Source: Corelogic