Welcome to the Property Planner’s Monthly Market Update, your comprehensive resource for the latest insights and trends in the real estate and economic landscape!
Stay informed and ahead of the curve with our expert analysis, helping you make well-informed decisions in the ever-evolving property market.
Home Value Growth over June
- National:0.5%
18th consecutive monthly increase nationally
Following a -7.5% decline recorded between May 22 and Jan 23, the national HVI has gained 13.5% and values have consistently pushed to new record highs since November last year.
- Combined capitals: 0.5%
- Combined regionals: 0.4%
- Capital Cities
- Perth: 2.0% after 2.0% last month
- Adelaide: 1.8% after 1.7% last month
- Brisbane: 1.1% after 1.2% last month
- Sydney: 0.3% after 0.5% last month
- Canberra: 0.0% after 0.3% last month
- Darwin: -0.2% after 0.0% last month
- Melbourne: -0.4% after -0.2% last month
- Hobart: -0.5% after 0.1% last month
Source: CoreLogic
QUARTERLY GROWTH TRENDS – While the headline growth rate remains positive, it is clear momentum is leaving the cycle and conditions are becoming more diverse.
- Three capitals recorded a decline in values over the past three months: Melbourne led the decline with a -0.9% fall, alongside a – 0.8% and -0.3% reduction in Hobart and Darwin values respectively.
- Growth in Adelaide accelerated to 5.0%, the fastest rolling quarterly pace of growth since May 2022.
- Brisbane values rose at a quarterly pace of 3.8%, though this is down from a 4.7% increase seen this time last year.
Source: CoreLogic
QUARTILES
- An erosion in borrowing capacity and affordability factors is skewing demand towards the lower price points of the market, with lower quartile values leading the growth trend across every capital city except Darwin and Canberra, which are also the two most affordable capitals after adjusting for local incomes.
- At a combined capital city level, lower quartile dwelling values are up 3.3% over the past three months compared with a 0.8% increase in upper quartile values.
Source: CoreLogic
HOUSES VS UNITS
- Units are now rising faster than houses across most of the capitals. The only exceptions over the past three months were Darwin and the ACT, where affordability pressures are less pressing and a history of higher supply levels across the medium to high density sector has been more apparent.
- 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
Source: CoreLogic
Median Values
Median values – ALL DWELLINGS
- National – $798,207
- Combined capitals – $884,412
- Combined regional – $630,565
- Capitals –
- Sydney – $1,174,867
- Brisbane – $873,987
- Canberra – $870,910
- Melbourne – $781,949 (Adelaide and Perth on the brink of overtaking Melbourne during August)
- Adelaide – $776,597
- Perth – $773,335
For Adelaide, this marks the first time in history that home values will exceed those of Melbourne.
Meanwhile, Perth is poised to reclaim a position it last held a decade ago.
- Hobart – $646,863
- Darwin – $507,097
Median values – HOUSES
- National – $865,159
- Combined capitals – $997,963
- Combined regional – $646,311
- Capitals –
- Sydney – $1,473,038
- Canberra – $984,894
- Brisbane – $966,825
- Melbourne – $944,138
- Adelaide – $830,609
- Perth – $808,038
- Hobart – $686,660
- Darwin – $588,327
Median values – UNITS
- National – $652,524
- Combined capitals – $673,178
- Combined regional – $552,916
- Capitals –
- Sydney – $852,766
- Brisbane – $638,909
- Melbourne – $610,300
- Canberra – $583,073
- Adelaide – $546,429 (Perth and Adelaide both overtook Hobart in July – Adelaide also jumped ahead of Perth)
- Perth – $540,546
- Hobart – $536,318
- Darwin – $367,487
Source: CoreLogic
Annual growth trends
- Perth: 24.7%
- Brisbane: 16.0%
- Adelaide: 15.5%
- Combined capitals: 7.9%
- National: 7.6%
- Combined regional: 6.9%
- Sydney: 5.6%
- Darwin: 2.3%
- Canberra: 1.7%
- Melbourne: 0.2%
- Hobart: -1.2%
Source: CoreLogic
Rental Market
CoreLogic’s hedonic rental index was only 0.1% higher in July, the smallest monthly rise since August 2020.
The monthly change in rents was negative in Sydney and Brisbane (-0.1% in both cities and the first monthly decline since 2020) as well as Hobart (-0.3%).
UNITS
- A clear slowdown in the pace of rental growth across the unit sector has been the main drag on rental growth, especially in Sydney where the annual change in unit rents has dropped from 17.9% in May last year to 6.6%.
- Melbourne and Brisbane unit rents have also lost more than 8 percentage points in the annual growth rate.
- The slowdown in unit sector rental growth is off a high base.
- Despite the slower rate of annual growth, Sydney unit rents still rose by 6.6% over the past 12 months, which is more than double the pre-COVID decade average (2.7% annual growth).
- The easing in rental growth aligns with the peak in net overseas migration in the first quarter of 2023.
HOUSES
- With value growth outpacing rental growth we could once again see some downwards pressure on gross rental yields.
- In April 2022 the cost of your interest rate on average and the rent you were recieved was = (on average across the nation) and now the interest is on average almost 3% higher.
Source: CoreLogic
Source: CoreLogic
SQM – ROLLING 4 WEEKS CHANGE – AS OF 12 AUG
Asking rents fell –1% across Sydney in the past four weeks, the sharpest monthly decline since the pandemic
Rents also drifted lower in:
- Melbourne – -0.6%
- Perth – -0.6%
- Brisbane – -5%
- Hobart – -1.6%
Combined Capitals – -0.5%
In contrast
- Adelaide and Canberra rose by 1.1%
- Darwin rose by 6.4%
While the rental crisis was far from over, rental growth was likely to flatten from here.
There has been a lull in vacancy rates, which means that the rental shortage is not deteriorating further.
At this rate, rents will ease to single-digit annual growth very shortly.
We know the CPI data has been lagging asking rents, so in theory, we’re still likely to be reporting elevated rental growth in the Australian Bureau of Statistics data for the remainder of 2024, but we are at the point now where we can see that actual market and asking rents, are coming off
Source: SQM
Vacancy Rates
JULY vacancies
National – 1.3% – no change
- Canberra – 2.2%, up from 2.1%
- Sydney – 1.7%, no change
- CBD – 5.5%, down from 5.7%
- Melbourne – 1.5%, no change
- CBD – 4.0%, up from 3.8%
- Hobart – 1.2%, down from 1.5%
- Brisbane – 1.1%, no change
- CBD – 2.5%, down from 2.8%
- Perth – 0.8%, no change
- Adelaide – 0.7%, no change
- Darwin – 0.7%, no change
Source: SQM
Source: SQM
Listings Activity
SALES VOLUMES
- Annual transaction volumes appear to have moved past a peak with CoreLogic estimating 511,211 sales in the 12 months to July, down from 513,014 over the year to June.
- Although easing month-on-month, annual sales activity remains 9.3% higher than this time last year and is 5.1% above the previous five-year average.
Source: CoreLogic
CORELOGIC – TOTAL LISTINGS
Despite the stronger flow of new listings, total national listing levels have held relatively steady, suggesting the market is absorbing the above average flow of new listings.
At the national level, 136,135 listings were observed over the four weeks to 4 August, -1.7% below last year’s levels and -15.9% lower than the historic five-year average.
- available supply is a key factor explaining the diverse outcomes in housing growth trends.
- The number of homes for sale in Brisbane, Adelaide and Perth is more than 30% below average for this time of the year,
- while weaker markets like Melbourne, Hobart, Sydney and Canberra are recording advertised supply well above average levels
Source: CoreLogic
CORE LOGIC – NEW LISTINGS
Although winter traditionally is a seasonally slow period, national new listings have held above average since April.
Over the four weeks to 4 August, CoreLogic observed 36,973 new listings nationally, which is 1.0% higher than this time last year and 7.7% above the previous five-year average.
Early stage of listings growth in Brisbane, and lesser degree Perth
Source: CoreLogic
Consumer Sentiment
Consumer Sentiment index lifts slightly to 85, after 82.7 in July
A. Time to buy a dwelling index
- Fell to 71.4, after 75.7 in July
- New low for the year
- Buyer sentiment dropped to exceptionally weak levels in NSW (66.1)
- But is a little less bleak in Victoria (76.9) and South Australia (76.0).
- Nationally, the index has been at extremely weak levels, at or below the 80 mark, for two and a half years now, easily the most sustained period of depressed homebuyer sentiment over the history of the survey.
- The average index read over the last fifty years is 120.
B. House price expectations index
- Dropped slightly to 157.8 points, after 161.2 In July
- Index back to around the levels seen late last year.
- Consumers in Western Australia and South Australia remain much more bullish on the price outlook than consumers across the eastern seaboard.
- The average gap between index reads in these two groups is now close to 20pts.
- Price expectations are particularly subdued in Victoria where the state index read of 143.5 is close to the long run average seen historically.
Source: Westpac Melbourne Institute
Lending indicators
New loan commitments – purchases
In June 2024 in seasonally adjusted terms, the value of new loan commitments:
- Rose 1.3% for Housing overall – yearly change 19.1%
- Rose 0.5% for owner occupier – yearly change 13.2%
- Rose 2.7% for investor – yearly change 30.2%
$ value purchases
Ave, Peak and Trough are since July 2002
- % of Owner Occ – 62.25%
- Ave – 64.01%
- Peak – January 2021 – 77.19%
- % of Investors – 37.75%
- Ave – 35.99%
- Peak – April 2015 – 46.43%
Source: ABS
Refinancing
In June 2024 in seasonally adjusted terms, the value of external refinancing:
- for total housing fell 1.9% to $15.8b and was 20.9% lower compared to a year ago
- for owner-occupier housing fell 1.6% to $10.0b and was 26.3% lower compared to a year ago
- for investor housing fell 2.3% to $5.8b and was 9.4% lower compared to a year ago
Source: ABS
Personal loans
In June 2024 in seasonally adjusted terms, the value of new loan commitments:
- for fixed term personal finance rose 1.1%, after a fall of 4.3% in May
- for road vehicles rose 0.5%
- for personal investment fell 8.4%
Source: ABS
Construction
In June 2024
- Business construction (a typically volatile series) – rose 4.5%, after a rise of 39.4% in May, it is 25.7% higher than a year ago.
- These series can have volatile month-to-month movements in seasonally adjusted terms as they are strongly affected by small numbers of high value loans.
- Owner occupier finance – For the construction of new dwellings up 2.9% and was 14.2% higher compared to a year ago
Source: ABS
Unemployment
In trend terms, in June 2024:
- unemployment rate remained at 4.0%.
- participation rate remained at 66.8%.
- underemployment rate remained at 6.5%.
In seasonally adjusted terms, in June 2024:
- unemployment rate increased to 4.1%, from 4.0%
- participation rate increased to 66.9%, from 66.8%
- underemployment rate decreased to 6.5%, from 6.7%
Source: ABS
RBA
Rate Increases
- Total rise so far – 4.25%
- 2024 – TBD (no increase yet)
- 2023 – 1.25% increase
- 2022 – 3% increase
- Start date – 4 May 2022
- Last one 8 Nov 2023
- Number of pauses since last increase – 5
RBA decision – 6 Aug 2024
Inflation remains above target and is proving persistent.
- Inflation has fallen substantially since its peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance.
- But inflation is still some way above the midpoint of the 2–3 per cent target range.
- In underlying terms, as represented by the trimmed mean, the CPI rose by 3.9 per cent over the year to the June quarter, broadly as forecast in the May Statement on Monetary Policy(SMP).
- But the latest numbers also demonstrate that inflation is proving persistent.
- In year-ended terms, underlying inflation has now been above the midpoint of the target for 11 consecutive quarters. And quarterly underlying CPI inflation has fallen very little over the past year.
The outlook remains highly uncertain.
- The economic outlook is uncertain and recent data have demonstrated that the process of returning inflation to target has been slow and bumpy.
- The central forecasts set out in the latest SMP are for inflation to return to the target range of 2–3 per cent late in 2025 and approach the midpoint in 2026.
- This represents a slightly slower return to target than forecast in May, based on estimates that the gap between aggregate demand and supply in the economy is larger than previously thought.
- In part, this reflects an increase in the forecast for domestic demand.
- But it also reflects a judgement that the economy’s capacity to meet that demand is somewhat weaker than previously thought, evidenced by the persistence of inflation and ongoing strength in the labour market.
There is substantial uncertainty around these forecasts.
- Revisions to consumption and the saving rate in the most recent National Accounts, high unit labour costs and the persistence of inflation – particularly in the services sector – suggest there are upside risks to inflation.
- Wages growth appears to have peaked but is still above the level that can be sustained given trend productivity growth.
- On the other hand, momentum in economic activity has been weak, as evidenced by slow growth in GDP, a rise in the unemployment rate and reports that many businesses are under pressure.
- And there is a risk that household consumption picks up more slowly than expected, resulting in continued subdued output growth and a noticeable deterioration in the labour market.
- More broadly, there are uncertainties regarding the lags in the effect of monetary policy and how firms’ pricing decisions and wages will respond to the slower growth in the economy at a time of excess demand, and while conditions in the labour market remain tight.
- There also remains a high level of uncertainty about the overseas outlook.
- The outlook for the Chinese economy has softened and this has been reflected in commodity prices.
- Some central banks have eased policy, although they remain alert to the risk of persistent inflation.
- Globally, financial markets have been volatile of late and the Australian dollar has depreciated.
- Geopolitical uncertainties remain elevated, which may have implications for supply chains.
Returning inflation to target is the priority.
- Returning inflation to target within a reasonable timeframe remains the Board’s highest priority.
- This is consistent with the RBA’s mandate for price stability and full employment.
- To date, longer-term inflation expectations have been consistent with the inflation target and it is important that this remain the case.
- Inflation in underlying terms remains too high, and the latest projections show that it will be some time yet before inflation is sustainably in the target range.
- Data have reinforced the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out.
- Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range.
- The Board will rely upon the data and the evolving assessment of risks to guide its decisions.
- In doing so, it will continue to pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.
- The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.
Source: RBA
Inflation
Core Inflation – June
- The monthly CPI indicator rose 3.8% in the 12 months to June
- Down from 4.0% rise in 12 months to May
Which was in line with market expectations and matched forecasts, easing concerns of an imminent interest rate hike by the Reserve Bank of Australia
- The most significant price rises were
- Alcohol and tobacco (+6.9%)
- Housing (+5.5%)
- Transport (+4.2%)
- Food and non-alcoholic beverages (+3.3%)
- The annual movement for the monthly CPI indicator excluding volatile items and holiday travel was 4.0% in June, the same as the 4.0% rise in May.
- This series excludes Fruit and vegetables, Automotive fuel, and Holiday travel and accommodation.
- Annual trimmed mean inflation was 4.1% in June, down from 4.4% in May.
Source: ABS
Outlook for Interest Rates
Mixed outlook among experts on what this means for interest rates
- Commonwealth Bank (CommBank) predicts a rate cut starting in September 2024, with rates potentially decreasing to around 2.85% by mid-2025.
- Westpac also forecasts rate cuts to begin in September 2024, with a projection of the cash rate falling to 3.10% by September 2025
- ANZ anticipates that the first rate cuts will occur around November 2024, with the cash rate potentially dropping to about 3.60% by mid-2025.
- NAB expects rate cuts to start in the December quarter of 2024, with the cash rate reaching 3.10% by the end of 2025.
- The August 2024 report from Finder provides insights from over 40 economists and experts regarding the future of the RBA’s interest rate decisions:
- Some experts believe the RBA could start cutting rates as early as September 2024.
- A larger group of economists expects rate cuts to begin later, with many projecting the first cuts to occur in late 2024 or early 2025.
Interested to Learn More?
Listen to the Property Trio podcast for more market insights and expert analysis that you can’t afford to miss!
Reach Out to Us
If you would like to discuss your next steps, property plans, and mortgage strategy, get in touch with us today. Our team of experts is here to guide you through the complexities of the market and help you achieve your property goals.
