This week’s Australian Property Market Update
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Key takeaways
Australia’s housing markets are off to a strong start, with easing inflation and the prospect of an earlier than expected rate cut buoying vendor hopes and buyer appetites for property.
Our property markets bottomed around a year ago in January 2023 and our combined capital cities have increased in value by 10% over the last year. That’s very different to the pessimistic forecasts made by the RBA and many of the bank economists only 12 months ago of double digit price falls.
And it’s likely property prices and rents are going to keep increasing throughout 2024, albeit more slowly.
Sydney property prices increased 0.1% over the last week and also increased 0.1% over the last month and are 11.2% higher than they were 12 months ago.
Melbourne property prices dropped -0.1% over the last week, also dropped -0.1% over the last month, but are 3.9 higher than they were 12 months ago.
Brisbane property prices increased by 0.2% over the last week, increased 0.9% over the last month and are 14.8% higher than they were 12 months ago.
Overall, Australian capital dwelling prices increased by 0.4% over the last month and are now 10.3% higher than they were 12 months ago.
This current property cycle has been driven by an undersupply of good properties relative to current demand pushing up property values and rents
Australia’s housing markets are off to a strong start, with easing inflation and the prospect of an earlier than expected rate cut buoying vendor hopes and buyer appetites for property.
Corelogic’s national Home Value Index rose 0.4% in January, but beneath the headline result housing market performance remains diverse around the country as three capitals recorded a subtle decline over the month.
While capital growth is likely to be much more subdued in 2024 than it was in 2023, our 5 major capital cities should still see price growth this year, while Hobart, Canberra and Darwin may see prices fall a little in 2024
The underlying reason for continued property price growth will be that the demand to buy homes will continue to exceed supply, but moving forward our markets will be fragmented with a flight to quality properties.
It will be much the same for our rental market where the supply / demand equation is so far out of balance that we’ve experienced an unprecedented rental crisis with historically low vacancy rates and skyrocketing rents and this will continue into 2024.
On the auction front, with 1,671 auctions held across the combined capitals, last week was the second-biggest start to the auction season since CoreLogic auction records commenced in 2008, behind only the first week of February in 2022 (1,779).
Relative to the same time last year (1,322), last week’s auction activity was up 26.4% and was more than double the number of capital city auctions held over the year so far (803).
Last week’s combined capitals’ preliminary clearance rate jumped relative to the end of last year when fading success at auction saw preliminary clearance rates hold around the mid-60 % range before revising below 60% at final numbers.
With 1,268 results collected so far, last week’s preliminary clearance rate came in at 73.9%, the highest since the week ending August 20th 2023 (74.0%).
See Corelogic’s full auction report below.
Corelogic reports that:
- Sydney property prices increased 0.1% over the last week and also increased 0.1% over the last month and are 11.2% higher than they were 12 months ago.
- Melbourne property prices dropped -0.1% over the last week, also dropped -0.1% over the last month, and are 3.9% higher than they were 12 months ago.
- Brisbane property prices increased by 0.2% over the last week, increased 0.9% over the last month and are 14.8% higher than they were 12 months ago.
Overall, Australian capital dwelling prices increased by 0.4% over the last month and are now 10.3% higher than they were 12 months ago.
Clearly, we are in the early stages of a new property cycle driven by an undersupply of good properties relative to increasing demand.
Source: CoreLogic February 5th 2024
Of course, these are “overall” figures – there is not one Sydney or Melbourne or Brisbane property market.
And various segments of each market are performing differently.
While the top end of our housing markets were the first to turn around early last year, particularly in Sydney, now median price properties are increasing in value strongly.
To help keep you up-to-date with all that’s happening in property, here is my updated weekly analysis of data and charts as of 5th February 2024 provided by CoreLogic, and realestate.com.au.
Property asking prices.
Property asking prices are a useful leading indicator for housing markets – giving a good indication of what’s ahead.
Source: SQM Research.
The value of property asking prices as a leading indicator for housing markets is quite significant.
In fact it’s more valuable than median prices which can be quite misleading.
Let’s delve into why this is the case and how it impacts the real estate market.
- Early Market Sentiment Indicator: Asking prices often reflect the current sentiment of sellers in the real estate market.
If sellers are confident, they might set higher asking prices, anticipating strong demand.
Conversely, if sellers are uncertain or perceive a market downturn, they might lower their asking prices to attract buyers.
This makes asking prices a real-time indicator of market sentiment, often preceding changes in actual sales prices. - Predictive of Future Price Trends: Trends in asking prices can be predictive of where the actual property prices are headed.
For example, a consistent rise in asking prices over a period can signal an upcoming rise in transaction prices. - Impact of Economic Factors: Economic factors such as interest rates, employment rates, and broader economic health influence asking prices.
For instance, changes in the Reserve Bank of Australia’s policies or shifts in the job market can quickly reflect in the asking prices, providing insights into how these factors are influencing the housing market. - Regional Variations: In a diverse market like Australia’s, asking prices can also provide insights into regional disparities.
For instance, the property markets in Melbourne and Sydney might behave differently from those in Brisbane or Perth. Asking prices can give early indications of these regional trends. - Influence of Supply and Demand: Asking prices are also a response to the balance of supply and demand in the market.
In areas with limited supply and high demand, asking prices tend to be higher and vice versa.
However, it’s important to note that while asking prices are a valuable indicator, they should not be used in isolation.
Other factors like actual sales prices, time on market, auction clearance rates, and economic conditions also play crucial roles in understanding the property market dynamics.
Last weekend’s auction report.
The first major week of auctions this year has set a cracking pace, with a surge in both the volume of auctions and clearance rates.
With 1,671 auctions held across the combined capitals, last week was the second-biggest start to the auction season since CoreLogic auction records commenced in 2008, behind only the first week of February in 2022 (1,779).
Relative to the same time last year (1,322), last week’s auction activity was up 26.4% and was more than double the number of capital city auctions held over the year so far (803).
Last week’s combined capitals’ preliminary clearance rate jumped relative to the end of last year when fading success at auction saw preliminary clearance rates hold around the mid-60 % range before revising below 60% at final numbers.
With 1,268 results collected so far, last week’s preliminary clearance rate came in at 73.9%, the highest since the week ending August 20th 2023 (74.0%).
Across the largest auction markets, Melbourne hosted 603 auctions, while Sydney saw 562 homes go under the hammer.
Compared to this time last year, both markets saw a sizable lift in auction activity, up 46.0% and 32.5%, respectively.
Sydney and Melbourne also saw a sizable step change in early success rates compared to the end of last year, with both markets recording a
preliminary clearance rate above the 70% mark.
Melbourne recorded its highest preliminary clearance rate since early October last year, with 71.9% of the 488 results collected so far returning a successful result.
Sydney’s early clearance rate came in at 76.3% with 434 results collected – the city’s highest preliminary result since the week ending July 20th 2023 (77.5%).
Across the smaller capitals, Brisbane hosted the busiest auction week, with 203 homes auctioned, followed by Adelaide (159), Canberra (132) and Perth (9).
Canberra recorded the highest preliminary clearance rate at 80.0%, followed by Adelaide and Brisbane, with early success rates of 77.6% and 68.5%.
In Perth, just one of the three auction results collected so far was positive, while one of the three auctions held in Tasmania was successful.
Overall, it looks like auction markets are starting the year on a strong footing.
Potentially, the news of low inflation and the possibility of early rate cuts is already boosting sentiment.
The next few weeks should provide further guidance on whether this strong result is simply some early-year exuberance or a trend that can persist.
| City | Clearance rate | Total auctions | CoreLogic auction results | Cleared auctions | Uncleared auctions |
| Sydney | 76.3% | 562 | 434 | 331 | 103 |
| Melbourne | 71.9% | 603 | 488 | 351 | 137 |
| Brisbane | 68.5% | 203 | 168 | 115 | 53 |
| Adelaide | 77.6% | 159 | 98 | 76 | 22 |
| Perth | n.a. | 9 | 3 | 1 | 2 |
| Tasmania | n.a. | 3 | 2 | 1 | 1 |
| Canberra | 80.0% | 132 | 75 | 60 | 15 |
| Weighted Average | 73.9% | 1,671 | 1,268 | 935 | 333 |
Source: CoreLogic
Our Rental Markets
Our rental markets have been tightening further over the last few months, with vacancy rates for both houses and apartments extremely low across the country and asking rents rising rapidly.
Asking rents across the capital cities for houses had been rising in annual terms in the “double digits”, while for units, new asking rents are rising at faster rates, at over 20% in Sydney, Melbourne and Brisbane.
The recently released National Accounts showed that Australia’s population has grown by around 620,000 people in the past financial year.
That’s the highest number in history and a hundred thousand more than what the May federal budget projected.
This record 2.8% expansion in the 15 plus age group of our population is placing a great strain on our rental markets.
The number of overseas students and also people on graduate visas in Australia has increased by just over three hundred thousand in the last financial year.
In particular rents have been rebounding across inner-city rental markets (popular with international students) after slumping during the pandemic when international borders were closed.
While the pace of rental growth is likely to slow down, with current vacancy rates rents will continue to increase as there is a minimal new supply of properties set to enter the market in the medium-term future.
Vendor Metrics
As the following chart shows, houses are still being snapped up quickly by eager buyers.
READ MORE: The latest median property prices in Australia’s major cities
At a national level, properties are taking slightly longer to sell than they were during the property boom of 2020 and 2021.
However the number of days to sell a property is still relatively low (a sign of the tight supply situation for good properties), and vendor discounting is still at very low levels.
In general, houses are selling quicker than apartments, but the shortage of good properties on the market is seeing A-grade properties selling quickly with minimal discounting.
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