The Property Planner’s Monthly Market Update: May 2024

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 May

The 16th consecutive month of growth and the largest monthly gain since October last year

Source: CoreLogic

Sydney values recover: The Sydney market also reached a new milestone in May, posting a nominal recovery, equaling the earlier record high set in January 2022.

Sydney dwelling values dropped by -12.4% following the January 2022 peak, finding a floor a year later. The market has since posted a 14.1% rise through the cycle to-date.

UPPER QUARTILE home values have generally shown the lowest rate of growth over the past year.

  • Across the combined capitals index, upper quartile dwelling values are up 6.7% over the past 12 months compared with a 13.4% gain across the lower quartile of the market.

Source: CoreLogic

SUPPLY AND DEMAND

The trend in housing values and activity continues to be insulated from the combined effect of:

  1. High interest rates
  2. Cost of living pressures
  3. Deeply pessimistic consumer sentiment levels.
  4. The common denominator remains a mismatch between housing supply and housing demand.
  5. Low listings -16% compared to 5 year average
  6. Available housing supply, based on the number of homes advertised for sale over the past four weeks, remains well below average.
  7. Capital city listings are – 16% below the previous five-year average and nearly -2% lower than a year ago.
  8. Demonstrated demand, based on the quarterly number of home sales, has tracked 7.2% above the previous five-year average and are 2.8% higher than a year ago.
  9. It’s this disconnect between supply and demand that is trumping the downside pressures from interest rates, high inflation and low sentiment.
  10. Despite worsening affordability pressures, from both a purchasing and a rental perspective, Australian residents still need to keep a roof over their heads
  11. A supply response still seems to be some way off, with new dwelling approvals once again dipping in April.
  12. National approvals are up 3.5% on the same time last year, but -23.5% below the decade average.
  13. Across the multi-unit sector, approvals are almost -44% below its decade average.

Source: CoreLogic

Median Values

Median values – ALL DWELLINGS

  • National – $785,556
  • Combined capitals – $864,780
  • Combined regional – $626,888
  • Capitals –
    • Sydney – $1,156,020
    • Brisbane – $843,231
    • Canberra – $840,100

A changing of the guard: With Brisbane housing values consistently posting solid capital gains while ACT values remain relatively stable, we saw a changing of the guard in May.

Brisbane overtook Canberra as having the second-highest median dwelling value across the capitals in May, a position Brisbane hasn’t recorded since 1997.

  • Melbourne – $780,437
  • Adelaide – $757,448
  • Perth – $736,649
  • Hobart – $655,170
  • Darwin – $502,120

Median values – HOUSES 

  • National – $848,383
  • Combined capitals – $975,592
  • Combined regional – $641,636
  • Capitals –
    • Sydney – $1,441,957
    • Canberra – $961,403
    • Brisbane – $937,479
    • Melbourne – $937,289

Brisbane house values are now also higher than the median house value across Melbourne, for the first time since June 2008.

Coming into the pandemic Melbourne’s median dwelling value held around a 37% premium over Brisbane’s, and ACT’s median was approximately 24% higher.

However, Brisbane values have increased at more than five times the pace of Melbourne values since the onset of COVID, with growth of 59.8% and 11.2% respectively.

Brisbane has also substantially outpaced growth in the ACT where values are up 31.8% since March 2020.

  • Adelaide – $811,059
  • Perth – $769,691
  • Hobart – $697,770
  • Darwin – $584,538

Median values – UNITS

  • National – $649,995
  • Combined capitals – $669,434
  • Combined regional – $557,865
  • Capitals –
    • Sydney – $848,961
    • Brisbane – $615,429 (BRISBANE OVERTOOK MELBOURNE)
    • Melbourne – $614,299
    • Canberra – $583,587
    • Hobart – $523,843
    • Adelaide – $521,822
    • Perth – $521,835
    • Darwin – $363,012

 

Annual growth trends

  • Perth: 22.0%
  • Brisbane: 16.3%
  • Adelaide: 14.4%
  • Combined capitals: 8.8%
  • Sydney: 7.4%
  • National: 8.3%
  • Combined regional: 6.8%
  • Darwin: 3.5%
  • Canberra: 2.0%
  • Melbourne: 1.8%
  • Hobart: -0.1%

 

Rental Market

The pace of growth across Australian rental markets has eased over the past few months, with national rental index rising 0.7% in May, the lowest monthly change since December last year.

  • Most markets have seen a reduction in rental growth relative to the first quarter of the year, when rental demand tends to be seasonally higher.
  • However, the annual pace of rental growth has also eased across most cities, especially across the unit sector where rental growth has been more severe.
  • Nationally, rents are up 8.5% over the past 12 months, down from 8.9% a year ago and a 9.3% rise two years ago.

Although rental growth has slowed, the easing trend has been gradual.

  • Over the five years prior to COVID the national rental index was rising at the average annual pace of just 1.3%.
  • In this context, and amid stretched rental affordability, an 8.5% annual rise in rents is extreme
  • The trend towards a slowdown in rental growth can probably be attributed to an easing in net migration since the first quarter of 2023, as well as rental affordability pressures forcing a change in rental patterns.
  • Additionally, as the bulge of dwellings associated with the HomeBuilder scheme transitions to completion, logically we should see those home owners moving out of rental accommodation into their newly built homes.

With rents rising at a faster pace than home values, gross rental yields have continued to trend higher, rising to 3.56% across the combined capitals, the highest gross yield since August 2019.

  • For most investors, higher yields will be welcome considering variable interest rates for investor loans are averaging 6.7%.

Source: CoreLogic

Listings Activity

TOTAL listings

CoreLogic – Comparison of 5 year averages

  • Extremely low levels of available supply across the strongest markets provide the best explanation for the difference in growth rates.
  • The number of properties available for sale in Perth and Adelaide remain more than -40% below the five-year average for this time of the year while Brisbane listings are -34% below average
  • Inventory levels in these markets remain well below average despite vendor activity lifting relative to this time last year.
  • Fresh listings are being absorbed rapidly by market demand, keeping stock levels low and upwards pressure on prices.
  • Conversely, listings across Hobart are tracking 41% above the five-year average, a consequence of lower demand, with home sales -6.4% below the previous five-year average over the rolling quarter.

SQM – Annual Movement (from May 2024)

  1. Nationally – listings are up 11.7% over the year
  2. Biggest drop in annual listings
    1. Perth – -23.4%
    2. Adelaide – -7.9%
  3. Biggest increase in annual listings
    1. Canberra – 35.0%
    2. Melbourne – 27.3%
    3. Sydney – 21.7%
    4. Hobart – 16.7%

NEW listings

SQM Annual Movement (from May 2024)

  1. Over the year NEW listings are up 20.8% nationally
    1. Capitals with highest increase in new listings
      1. Melbourne – 41.5%
      2. Sydney – 33.6%
  • Brisbane – 31.1%
  • Canberra – 26.3%

OLD listings

SQM Annual Movement (from May 2024)

  1. National – up 13.6% annually
  2. Annually
    1. Largest decrease in Perth -56.7% and Brisbane -31.3%
    2. Largest increase in Hobart 39.3%

   

Source: CoreLogic

 

Consumer Sentiment

Consumer Sentiment index dipped slightly to 82.2, after 82.4 in April

A. Time to buy a dwelling index

Lifted to 76.5, after 75.3 in April

Comments from Westpac Melbourne – The ‘time to buy a dwelling’ index rose 1.6% to 76.5 in May, reversing about half of April’s dip but staying well below the ‘neutral’ level of 100 and a very long way from the historical average of 121.

B. House price expectations index

  • On par 161.1 points, after 161.2 in April

Comments from Westpac Melbourne – Meanwhile, the Westpac Melbourne Institute Index of House Price Expectations was again essentially unchanged at just over 161, well above the long run average of 126.5.

Source: Westpac Melbourne Institute

Lending indicators

New loan commitments

In April 2024 in seasonally adjusted terms, the value of new loan commitments:

  1. Rose 4.8% for Housing overall – yearly change 24.6%
    1. Rose 4.3% for owner occupier – yearly change 7%
    2. Rose 5.6% for investor – yearly change 1%

Source: ABS

Refinancing

In April 2024 in seasonally adjusted terms, the value of external refinancing:

  • for total housing rose 1.7% to $16.3b but was 16.3% lower compared to a year ago
  • for owner-occupier housing fell 0.4% to $10.2b and was 22.8% lower compared to a year ago
  • for investor housing rose 5.5% to $6.1b but was 2.8% lower compared to a year ago

Source: ABS

Personal loans

In April 2024 in seasonally adjusted terms, the value of new loan commitments:

  • for fixed term personal finance rose 0.8%, after a rise of 4.1% in March
  • for road vehicles fell 1.2%
  • for personal investment rose 1.5%

Source: ABS

Construction

In April 2024

  • Business construction (a typically volatile series) – Fell -1.4% after fall of -43.1% in March and -46.1% lower 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 6.5% and was 12.1% higher compared to a year ago

Source: ABS

Unemployment

In seasonally adjusted terms, in April 2024:

  • unemployment rate increased to 4.1%, from 3.9%
  • participation rate increased to 66.7%, from 66.6%
  • underemployment rate increased to 6.6%, from 6.5%

Source: ABS

Inflation

Monthly inflation – April

  • The monthly CPI indicator rose 3.6% in the 12 months to April.
  • The most significant price rises were
    • Alcohol and tobacco (+6.5%)
    • Housing (+4.9%)
    • Transport (+4.2%)
    • Food and non-alcoholic beverages (+3.8%)
  • The annual movement for the monthly CPI indicator excluding volatile items and holiday travel was 4.1% in April, unchanged from March.
    • This series excludes Fruit and vegetables, Automotive fuel, and Holiday travel and accommodation.
  • Annual trimmed mean inflation was 4.1% in April, up slightly from 4.0% in March.

Source: ABS

Quarterly Inflation – March quarter 2024

  • The Consumer Price Index (CPI) rose 1.0% this quarter.
  • Over the twelve months to the March 2024 quarter, the CPI rose 3.6%.
  • The most significant price rises this quarter were
    • Tertiary education (+6.5%)
    • Secondary education (+6.1%)
    • Medical and hospital services (+2.3%)
    • Rents (+2.1%),

Source: ABS

Want to Learn More?

Click here to listen to Ep #262 of The Property Trio podcast – Market Update May 24 – Perth Surges, Brisbane Now 2nd Priciest City for Houses & All Dwellings, Passing Melbourne & Canberra, & Much More!on

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.

Listen to Our Podcast

180+ 5tar Reviews, Over 400,000+ Downloads

Join Our Newsletter

Subscribe to “The Property Planner, Buyer and Professor” Newsletter

9 + 13 =

Email us your questions or any topics you would like to be covered off on in future episodes:
Follow the podcast on social media