Brisbane has taken the lead in value growth, in a month which saw values and listings continue to rise around the country.
CoreLogic’s national home value index, released this week, shows that Australian housing values rose 1.5% in October, a similar result to August and September.
Although the national growth reading remains virtually unchanged over the month, market conditions are starting to show some diversity across various regions of Australia. Perth recorded its first negative monthly result since June last year, with values nudging 0.1% lower.
At the other end of the spectrum, Brisbane has taken over as the fastest growing market, with housing values up 2.5% in October. This was followed by Adelaide and Hobart, where the markets increased 2.0% in value over the month.
In Sydney and Melbourne, the monthly rate of growth has more than halved since the highs seen in March 2021, when they reached a monthly growth rate of 3.7% and 2.4% respectively.
Across the regional markets, New South Wales (2.1%) and Queensland (1.9%) led the pace of capital gains while Western Australia was the only broad rest-of-state region to record a marginal fall in housing values (down just 0.1%).
According to CoreLogic’s research director, Tim Lawless, slowing growth conditions are a factor of worsening housing affordability, rising supply levels, and reduced stimulus.
“Housing prices continue to outpace wages by a ratio of about 12:1”, Lawless said, adding that this is one of the reasons why first home buyers are becoming a progressively smaller component of housing demand.
“New listings have surged by 47% since the recent low in September and housing focused stimulus such as HomeBuilder and stamp duty concessions have now expired.
“Combining these factors with the subtle tightening of credit assessments set for November 1, and it’s highly likely the housing market will continue to gradually lose momentum.”
Although the monthly pace of growth is easing, the annual trend has continued to rise, which is a factor of the stronger growth conditions throughout early 2021. Nationally home values are up 21.6% over the year to October, with half the capitals recording an annual growth rate in excess of 20%. Across the broad regions of Australia, regional Tasmania has led the nation for the pace of annual capital gains with dwelling values rising by 29.1%.
Unit markets have generally continued to record a lower rate of growth relative to houses, with this trend most evident in the annual results. In the largest capitals, Sydney house values are up a stunning 30.4% compared to a 13.6% rise in unit values, while in Melbourne house values rose 19.5% over the year compared with a 9.2% gain in unit values. This trend is less evident across regional areas of Australia where the performance gap between houses and units is relatively small.
According to Lawless, this trend is likely to continue as investors flow back into the market.
“Investor demand across the unit sector could be bolstered as overseas borders open, which is likely to have a positive impact on rental demand, especially across inner city unit precincts”, he said.
Corelogic’s research also shows that property listings are finally starting to lift, albeit from an extremely low base.
The rise in new listings has outweighed buyer demand, pushing the total number of houses and units available for sale to 141,786; this is a 6.8% increase in active listings from the recent mid-September low.
“Overall, Australia’s housing market is continuing to record an above average rate of growth, despite signs that the market is continuing to cool”, Lawless said.
“As the economy continues to benefit from easing COVID-19 restrictions, current low interest rates should continue to support demand, along with tight advertised supply levels and improving consumer sentiment”, he concluded.
