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Home Value Growth over August
- National:0.5% – 19th consecutive month of increase in home values and slightly above the downwardly revised 0.3% increase seen through July.
- Combined capitals: 0.5%
- Combined regionals: 0.5%
- Capital Cities
- Perth: 2.0% after 2.0% last month
- Adelaide: 1.4% after 1.8% last month
- Brisbane: 1.1% after 1.1% last month
- Sydney: 0.3% after 0.3% last month
- Hobart: -0.1% after -0.5% last month
- Darwin: -0.2% after -0.2% last month
- Melbourne: -0.2% after -0.4% last month
- Canberra: -0.4% after 0.0% last month
Source: CoreLogic
QUARTERLY GROWTH
- The pace of growth is showing clear signs of slowing with the quarterly increase in national home values (1.3%) now less than half the rate of growth in the same three month period last year (2.7%).
- Quarterly growth eased in most capital cities through winter.
- In Brisbane, there was a more pronounced slowdown in the quarterly growth rate between May (4.1%) and August (2.9%), suggesting an easing in demand across this increasingly less affordable market.
Source: CoreLogic
AFFORDABILITY / QUARTILES / UNITS
- The ongoing outperformance of ‘cheaper’ markets
- The lower quartile of the combined capital city market, which makes up the most affordable 25% of dwellings, rose 2.7% in the three months to August, compared to a 0.3% lift across the upper quartile.
- In a similar demonstration of demand being deflected towards lower price points, the quarterly change in unit values was higher than houses in five of the eight capital cities.
Looking forward, the national housing market should continue to see modest value increases to the end of 2024.
- While there is a clear slowdown in growth, housing values are underpinned by a longer-term lack of new supply, which has been exacerbated recently by ongoing constraints in the residential construction sector.
- The latest Statement on Monetary Policy from the RBA highlighted that finishing trades are in short supply, and the public infrastructure pipeline is creating greater competition for labour, especially in the multi-unit sector.
- Tight job markets continue to support mortgage servicing, however a more substantial
- likely narrowed the buyer pool to wealthier and higherincome buyers.
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 – $802,357
- Combined capitals – $885,877
- Combined regional – $637,660
- Capitals –
- Sydney – $1,180,463
- Brisbane – $875,040
- Canberra – $845,875
- Adelaide – $790,789
- Perth – $785,250
- Melbourne – $776,044
- Hobart – $655,114
- Darwin – $504,367
In August, Adelaide and Perth saw increases in the median dwelling value of $13,600 and $15,300 respectively, against a -$3,100 fall in the Melbourne median.
This is the first time that Perth’s median dwelling value has been higher than Melbourne’s since February 2015, when the city was just coming off the highs of an iron-ore boom.
It is also the first time in CoreLogic’s forty-year median dwelling value series that Adelaide has had a higher median than Melbourne.
It is worth noting that the median dwelling value is highly skewed by the portion of units in each market. Melbourne’s median is weighed down by the composition of housing in the city, where around a third of homes are units, compared with about 16% of homes in Perth and Adelaide. The median house and unit values across Perth and Adelaide are still lower than in Melbourne.
Melbourne home values have now declined for six consecutive months.
There were a wide range of factors contributing to Melbourne’s softer market conditions, but it is not the only market in decline.
The increased tax burden on investment property owners in Victoria, as shown in an annual fall in the number of investment loans secured in the state reported by the ABS, may be dissuading some demand.
Supply is also a big factor for Victoria, where the state saw more dwelling completions over the past decade than any other state or territory.
Source: CoreLogic
Median values – HOUSES
- National – $867,775
- Combined capitals – $997,352
- Combined regional – $651,864
- Capitals –
- Sydney – $1,471,892
- Canberra – $967,933
- Brisbane – $966,382
- Melbourne – $929,715
- Adelaide – $844,963
- Perth – $818,839
- Hobart – $692,606
- Darwin – $589,392
Source: CoreLogic
Median values – UNITS
- National – $660,423
- Combined capitals – $679,849
- Combined regional – $565,868
- Capitals –
- Sydney – $859,050
- Brisbane – $653,325
- Melbourne – $610,652
- Canberra – $579,774
- Perth – $561,582 (Perth overtook Adelaide)
- Adelaide – $555,464
- Hobart – $549,569
- Darwin – $355,297
Source: CoreLogic
Annual growth trends
- Perth: 24.7%
- Brisbane: 15.0%
- Adelaide: 14.9%
- Combined capitals: 7.1%
- National: 7.1%
- Combined regional: 7.0%
- Sydney: 5.0%
- Darwin: 1.6%
- Canberra: 1.5%
- Melbourne: -1.0%
- Hobart: -1.2%
Source: CoreLogic
Rental Market
- The national CoreLogic hedonic rent index was unchanged for a second consecutive month in August, and rent values declined in Sydney for a second consecutive month.
- While monthly results are subject to seasonality, the annual growth trend also shows a consistent slowdown in rent rises.
- Nationally, rent values were up 7.2% in the year to August, which is the lowest annual growth rate since May 2021.
- Annual rent growth is now slowing in every capital city market, except for Hobart, which is coming off a dip in rent values through 2023.
The slowdown in rent growth is likely attributable to a combination of supply and demand factors.
- On the demand side, net overseas migration has dropped, with ABS data showing a decline from 165,000 in the March quarter of 2023 to 107,000 in December quarter, and overseas arrivals data suggests a fall in international student arrivals.
- Additionally, the latest RBA reporting on average household size showed a slight uptick, suggesting share housing or multi-generational family homes may be back on the rise in response to high rents.
- On the supply side, investor trends vary state-to-state, but nationally investor loans secured were up 10.7% in the year to June.
- Dwelling completions remain an issue, with a strained construction sector keeping a floor under both rent and purchase prices.
Rent yield dynamics are also changing, which could shape future investor activity
- For the first time in the history of the CoreLogic gross rent yield series, Brisbane and Adelaide rent yields are on par with Melbourne, at 3.7%.
- Gross rent yields in Perth are also showing a substantial decline, from a recent high of 4.8% in June 2023 to 4.3% in August.
- Yield compression is common when values are rising strongly, which may slow investor interest in high-growth cities.
- However, many investors are attracted to long-term prospects for capital growth over high rent returns.
Source: CoreLogic
Source: CoreLogic
SQM – ROLLING 4 WEEKS CHANGE – AS OF 4 Sep
Houses and units combined – rolling 4 week change
National – 0.0%
- Darwin – 1.7%
- Adelaide – 1.4%
- Melbourne – 0.8%
- Sydney – -0.2%
- Canberra – -0.3%
- Perth – -0.7%
- Brisbane – -0.9%
- Hobart – -1.1%
Source: SQM
Listings Activity
CORELOGIC – TOTAL LISTINGS – 5 YEAR AVE
- At a high level, there is still more demand for housing than available supply, but the flow of advertised supply and demand are becoming increasingly balanced.
- Supply levels vary markedly from region to region, with
- Total listings in Melbourne about -25% higher than the previous five-year average
- Total listings in Perth and Adelaide are down on the five-year average by more than -40%.
Spring sellers should be aware of differences market-to-market.
- Heading into the spring selling season, there is no guarantee that buyer numbers will rise to meet the seasonal uplift in listings.
- While total stock levels are generally low across the country, there are some markets where total listings are accruing despite soft price performance (mainly across Victoria and Tasmania).
Source: CoreLogic
SQM – TOTAL listings – ANNUAL CHANGE
- National – 11.1%
- Canberra – 31.7%
- Melbourne – 22.8%
- Sydney – 20.2%
- Hobart – 19.4%
- Brisbane – 3.3%
- Darwin – -5.8%
- Adelaide – -9.0%
- Perth – -21.6%
SQM – NEW listings – ANNUAL CHANGE
- National – 8.5%
- Melbourne – 20.6%
- Sydney – 18.3%
- Brisbane – 13.0%
- Canberra – 11.9%
- Hobart – 6.6%
- Adelaide – -3.8%
- Perth – -7.7%
- Darwin – -28.6%
SQM – OLD listings – ANNUAL CHANGE
- National – 14.9%
- Canberra – 44.6%
- Hobart – 31.5%
- Darwin – 28.8%
- Melbourne – 9.9%
- Sydney – 5.0%
- Adelaide – -14.0%
- Brisbane – -24.9%
- Perth – -53.4%
SQM – DISTRESSED listings – ANNUAL CHANGE
- National – -1.1%
- ACT – 61.1%
- TAS – 34.7%
- VIC – 26.0%
- NSW– 13.0%
- NT – 1.7%
- QLD – -13.7%
- WA – -16.5%
- SA – -19.0%
Source: SQM Research
Consumer Sentiment
Consumer Sentiment index drops slightly to 84.6, after 85 in August
A. Time to buy a dwelling index
- Lifted to 76.1, after 71.4 in August
- The ‘time to buy a dwelling’ index rose 6.6% overall to 76.1.
- However, state moves varied widely with gains in
- New South Wales (+19.4%) & Victoria (+9.9%)
- Index reads of 84 in NSW and 79 in Victoria
- Although even in these states the overall level of buyer sentiment is still deeply pessimistic (the long run average nationally is 117).
- Contrasting with marked declines in
- Queensland (–17.9%) and Western Australia (–6.4%).
- Surging prices have seen ‘time to buy a dwelling’ index reads drop into the 60-70 range for Queensland and Western Australia.
- That largely reflects diverging price performances and associated shifts in affordability.
B. House price expectations index
- Dropped to 150.5 points, after 157.8 In August
- It’s a similar story around price expectations.
- The Westpac Melbourne Institute Index of House Price Expectations fell 4.6% to 150.5, a fifteen-month low.
- However, that weakening again centred on Victoria (–8.5%) and New South Wales (–5.6%)
- With price expectations lifting in Queensland (+3.7%) and Western Australia (+0.5%).
Source: Westpac Melbourne Institute
Source: Westpac Melbourne Institute
Lending indicators
Source: ABS
New loan commitments – purchases
In July 2024 in seasonally adjusted terms, the value of new loan commitments:
- Rose 3.9% for Housing overall – yearly change 26.5%
- Rose 2.9% for owner occupier – yearly change 4%
- Rose 5.4% for investor – yearly change 4%
$ value purchases
Ave, Peak and Trough are since July 2002
- % of Owner Occ – 61.7%
- Ave – 64.01%
- Peak – January 2021 – 77.19%
- % of Investors – 38.3%
- Ave – 35.99%
- Peak – April 2015 – 46.43%
Source: ABS
Refinancing
In July 2024 in seasonally adjusted terms, the value of external refinancing:
- for total housing rose 4.3%, but was 21.4% lower compared to a year ago
- for owner-occupier housing rose 3.8%, but was 26.6% lower compared to a year ago
- for investor housing rose 5.2%, but was 10.6% lower compared to a year ago
Source: ABS
- Rebate offers ended
- Pricing wasn’t as strong but that is starting to come back again. CBA in particular stepped out of the market and lost market share over a period of time which is unusual for it.
- Serviceability has crunched many people such that they are mortgage prisoners and cannot refinance
- We were coming off historic highs so it is really normalizing
Personal loans
In July 2024 in seasonally adjusted terms, the value of new loan commitments:
- for fixed term personal finance rose 2.2%, after a rise of 2.4% in June
- for road vehicles rose 4.9%
- for personal investment rose 8.9%
Source: ABS
Construction
In July 2024
- Business construction (a typically volatile series) – rose 3.8%, after a rise of 4.5% in June, it is 76.6% 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 down 3.2% and was 16.1% higher compared to a year ago
Source: ABS
Unemployment
In trend terms, in July 2024:
- unemployment rate increased to 4.2%, from 4.0% previous month
- participation rate increased to 67.1%.
- underemployment rate remained at 6.4%.
In seasonally adjusted terms, in July 2024:
- unemployment rate increased to 4.2%, from 4.1% previous month
- participation rate increased to 67.1%.
- underemployment rate decreased to 6.3%.
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 – 6
Inflation
Core Inflation – July
- The monthly CPI indicator rose 3.5% in the 12 months to July
- Down from 3.8% rise in 12 months to June
The reduction to 3.5% was slightly above market expectations of a reduction to 3.4%, however reflects a continued moderation from previous months, suggesting that inflationary pressures are easing.
This time last year (July 2023), inflation rose by 4.9%, with the peak being 7.8% in December 2022.
- The most significant price rises were
- Alcohol and tobacco (+7.2%)
- Housing (+4.0%)
- Transport (+3.4%)
- Food and non-alcoholic beverages (+3.8%)
- The annual movement for the monthly CPI indicator excluding volatile items and holiday travel was 3.7% in July, down from 4.0% in June
- This series excludes Fruit and vegetables, Automotive fuel, and Holiday travel and accommodation.
- Annual trimmed mean inflation was 3.8% in July, down from 4.1% in June
- trimmed mean reduces the impact of irregular or temporary price changes in the CPI
Source: ABS
Outlook for Interest Rates
Most experts expect the RBA to maintain the current cash rate until at least late 2024 or early 2025.
- Commonwealth Bank (CBA): CBA has reaffirmed that it expects the RBA to hold rates steady for now, with rate cuts potentially starting in early 2025. This is based on the belief that inflation is moderating but still above target. The bank previously forecasted cuts to begin by late 2024, but with the recent inflation data, it seems they are more cautious about timing.
- ANZ: ANZ has maintained its view that there will be no further rate hikes in 2024 and anticipates one rate cut of 0.25% late in 2024. They expect further cuts to follow in 2025, but the exact timeline depends on inflation trends over the coming months.
- Westpac: Westpac continues to project rate cuts starting in September 2024, with gradual reductions bringing the cash rate down to 3.10% by late 2025. They remain optimistic that inflation will ease sufficiently to justify these cuts
- Garry Barrett (University of Sydney) predicts that the Reserve Bank of Australia (RBA) will hold rates steady for the remainder of 2024. He highlights that the recent CPI data suggests that inflationary pressures are easing, which supports the idea that further rate hikes are unnecessary(
- Matthew Greenwood-Nimmo (University of Melbourne) similarly believes that the RBA will hold the cash rate in the near term. He cites inflation being generally in line with expectations, which suggests the central bank can afford to wait and reassess its policy stance later in 2024 or early 2025(
- Michael Yardney (Metropole Property Group) suggests that while inflation remains above the RBA’s target, the July CPI data supports a wait-and-see approach. He expects the RBA to keep interest rates on hold for the rest of 2024 and wait for further data before making any decisions on cuts(
- Kyle Rodda (Capital.com) also expects the RBA to hold rates steady for the remainder of the year, as inflation tracks close to projections. This outlook aligns with a view that the RBA will likely not begin rate cuts until early 2025 unless inflation declines more sharply
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