The Australian residential property market has shown diverse trends across different regions in May 2024, as indicated by CoreLogic’s Home Value Index. The market experienced a significant recovery in Sydney, while Brisbane overtook Canberra as the second-most expensive capital city. Perth, Adelaide, and Brisbane led the growth among mid-sized capitals, with notable increases in home values.
Key Highlights
- Overall Market Growth: CoreLogic’s Home Value Index rose by 0.8% in May, marking the 16th consecutive month of growth and the largest monthly gain since October 2023.
- Capital City Performance:
- Sydney: Home values increased by 0.6% in May, with an annual growth of 7.4%. The median dwelling value in Sydney reached $1,156,020.
- Melbourne: A modest increase of 0.1% was observed, with an annual growth of 1.8%. The median dwelling value stood at $780,437.
- Brisbane: The city saw a 1.4% increase in May and a substantial annual growth of 16.3%, bringing the median dwelling value to $843,231.
- Adelaide: Home values rose by 1.8% in May, and the annual growth was 14.4%. The median dwelling value was $757,448.
- Perth: Leading the growth, Perth experienced a 2.0% increase in May and an annual growth of 22.0%, with the median dwelling value reaching $736,649.
- Hobart: Contrarily, home values declined by 0.5% in May and slightly decreased by 0.1% annually. The median dwelling value was $655,170.
- Darwin: Saw a minor decline of 0.3% in May, with an annual growth of 3.5%. The median dwelling value was $502,120.
- Canberra: Home values increased by 0.5% in May and 2.0% annually, with the median dwelling value at $840,100.
Market Dynamics
- Supply Constraints: The strong performance in markets like Perth and Adelaide is largely attributed to extremely low levels of available supply. Perth and Adelaide’s property listings remain over 40% below the five-year average, while Brisbane’s listings are 34% below average. This low inventory is driving up prices.
- Listings and Sales Trends: Hobart’s listings are 41% above the five-year average due to lower demand, with home sales 6.4% below the previous five-year average over the rolling quarter.
Changing Dynamics
- Brisbane Overtakes Canberra: In May, Brisbane overtook Canberra as the second-most expensive capital city in Australia. This shift is partly due to Brisbane’s substantial growth in dwelling values, which have increased by 59.8% since the onset of COVID-19, compared to Melbourne’s 11.2% and Canberra’s 31.8%.
- Sydney’s Recovery: Sydney reached a new milestone by posting a nominal recovery, equalling the previous record high set in January 2022. Sydney’s market has rebounded by 14.1% since its trough after a 12.4% decline.
Rental Market Trends
- Rental Growth: The national rental index rose by 0.7% in May, with an annual increase of 8.5%. This growth, although slowing, remains significant compared to the pre-COVID annual average of 1.3%.
- Gross Rental Yields: Gross rental yields have increased to 3.56% across combined capitals, the highest since August 2019. However, with investor loan interest rates averaging 6.7%, many leveraged investors might still face cash flow losses despite rising rental incomes.
- Monthly Change in Dwelling Values (May 2024)
- Data: Sydney (0.6%), Melbourne (0.1%), Brisbane (1.4%), Adelaide (1.8%), Perth (2.0%), Hobart (-0.5%), Darwin (-0.3%), Canberra (0.5%)
- Annual Change in Dwelling Values (May 2024)
- Data: Sydney (7.4%), Melbourne (1.8%), Brisbane (16.3%), Adelaide (14.4%), Perth (22.0%), Hobart (-0.1%), Darwin (3.5%), Canberra (2.0%)
Summary
The Australian residential property market continues to experience varied growth across different regions. The low inventory levels in high-performing cities are putting upward pressure on prices, while rental yields are improving despite high interest rates. As market dynamics evolve, especially with changes in supply and demand, the trends in property values and rental growth will be crucial to monitor.
Source: CoreLogic. (2024). Home Value Index
