Australian home values increased in August, but the pace of growth is showing clear signs of slowing, property data analysts Corelogic said this week.
Corelogic’s Home Value Index lifted 0.5% during the month of August, for the 19th consecutive month of growth.
The pace of growth is showing clear signs of slowing, however, with the quarterly increase in national home values (1.3%) now less than half the rate of growth in the same three-month period of 2023 (2.7%).
There is still more demand for housing than available supply, but the flow of advertised supply and demand are becoming increasingly balanced, Corelogic’s research shows. Supply levels vary markedly from region to region, with total listings in Melbourne about 25% higher than the previous five-year average, while total listings in Perth and Adelaide are down on the five-year average by more than 40%.
Capital growth across the cities remains diverse. Monthly gains were led by a 2.0% increase in Perth, followed by 1.4% in Adelaide and 1.1% in Brisbane. Monthly growth in Sydney was just 0.3%, while four capital cities saw a monthly decline in home values, led by a 0.4% dip in Canberra, 0.2% in Melbourne and Darwin, and a mild 0.1% fall in Hobart.
CoreLogic’s Head of Research, Eliza Owen, noted that while seasonality might have contributed to weaker value growth through winter, affordability constraints are a key factor behind the broader slowdown.
“The seasonally adjusted Home Value Index had a stronger result through the three months to August, at 1.7%”, Owen said, adding that this is still down from the 3.3% lift seen in the winter of 2023.
The research shows that ongoing outperformance of ‘cheaper’ markets reiterates a strain on demand. 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.
The median dwelling value in Melbourne has been overtaken by Adelaide and Perth, making Melbourne’s median the third lowest among the capital city markets. The Adelaide median is now $790,800 and Perth’s is now $785,250, compared with $776,044 in Melbourne. 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.
Looking forward, the national housing market should continue to see modest value increases to the end of 2024, Owen suggests.
“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”, she concluded.
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