Property prices continue their upward march
National property prices had a 0.8 per cent rise in September as the recovery trend moved through an eighth consecutive month of capital growth.
Property owners around Australia have enjoyed an eighth successive month of property price rises.
With the exception of Hobart, every capital city and the nation’s regional property markets all enjoyed strong growth in September.
City markets outperformed regional areas, notching up growth of 0.9 per cent compared to 0.4 per cent for regional areas.
The national Home Value Index (HVI) is now just 1.3 per cent below record highs recorded in April last year.
CoreLogic’s research director, Tim Lawless, noted at the current rate of growth, the national HVI is likely to recover to a new nominal high by the end of November.
“We have already seen dwelling values reach new record highs in Perth and Adelaide,” he said.
“Brisbane looks set to reach a new record high in October, with home values currently only 0.6 per cent below their previous peak.
“Hobart and Canberra have the furthest to go before staging a nominal recovery, with dwelling values remaining 12.4 per cent and 7.0 per cent below their cyclical highs from last year.”
The quarterly pace of growth in national home values is at 2.2 per cent, easing from a 3.0 per cent gain in the June quarter and reflecting a slowdown as advertised stock levels rise, helping to take some heat out of the market.
Drew Hendrey, Executive Director of Valuation and Advisory, Herron Todd White (HTW), said spring had sprung early this year.
“Listings began rising in July in response to the Reserve Bank of Australia leaving rates on hold.
“Sellers were eager to list in the more certain market conditions – many reasoning it would be best to beat the rush in September/October and buyers have been similarly more confident about the market and the cost of borrowing.
“The result has been not only more transactions, but capital gains too.
“Most major centres where prices had been fairly dormant throughout 2022 and early 2023 saw between two and 3.5 per cent price growth in the three months to the end of August.”
HTW’s property clock suggests Adelaide may have reached it peak in terms of house prices and Brisbane may be about to experience a decline, while Perth’s hot property market still has some growth ahead.
Regional markets are continuing to lag the capitals with every ‘rest of state’ region recording weaker growth conditions relative to their capital city counterpart over the September quarter.
At a broad level, the combined regional markets recorded a 1.1 per cent rise in dwelling values through the September quarter which was less than half the gain across the combined capital city market (2.5 per cent).
“Softer housing conditions across regional Australia looks to be more demand-driven, with the estimated number of home sales 6.5 per cent lower than a year ago and 9.2 per cent lower relative to the previous five[1]year average,” Mr Lawless said.
“In contrast, the estimated volume of home sales across the combined capital cities was 1.9 per cent higher than a year ago and 6.3 per cent above the five-year average.”
Most regional markets are also showing relatively low advertised supply levels which has been enough to place some upwards pressure on values. Regional Victoria and regional Tasmania are exceptions, where advertised supply is above average and housing values trended lower over the quarter.
Rents continue to rise
CoreLogic figures show rents rose for the 35th consecutive month in July.
National rents increased a further 0.7 per cent in September taking rents 6.4 per cent higher over the first nine months of the year and 8.4 per cent higher over the past 12 months.
The rise came as vacancy rates dipped again, dropping to 1.0 per cent across the capital cities and 1.2 per cent across regional Australia, both a record low for the series which commenced in 2006. Across the capital cities, vacancy rates range from just 0.3 per cent across Adelaide to 2.5 per cent across Hobart.
“Rent markets remain tight pretty much everywhere,” Mr Lawless said.
“The pre-COVID average for capital city vacancy is 3.1 per cent.
“To see some cities with a vacancy rate persistently at sub 1 per cent levels is alarming to say the least.
“No doubt there are a broad range of negative social outcomes stemming from the undersupply of rental housing, the worst being increased rates of homelessness and rough living.”
Although vacancy rates have tightened, the pace of rental growth is easing in most markets. Across the combined capitals the quarterly rise in rents was 1.9 per cent in the September quarter, down from 2.7 per cent in the June quarter and 2.9 per cent through the first quarter of the year.
Annual rental growth has peaked, but at 10 per cent over the past 12 months, remains extremely high.
“The slowdown in rental growth may seem counter intuitive at a time when vacancy rates are tightening,” Mr Lawless said.
Interest rates pressure
Tim McKibbin, Chief Executive Officer, REINSW, said until last week’s concerning inflation figures, which show the battle against inflation is far from over, it seemed a foregone conclusion that the new-look RBA Board would leave rates unchanged.
“REINSW believes it is appropriate for rates to remain steady for at least the short-term.
“The high petrol prices behind the most recent upward CPI shift are an outlier to the broader economic picture.
“Cost of living pressure is having a pronounced impact and many renters hopeful of buying a first home are having great difficulty accumulating a deposit.
“Mortgage holders are hopeful for a steady cash rate. The continuation of the positive sales activity we’ve seen in the market in recent weeks depends on it too.
“PropTrack data shows the volume of new listings in Sydney in August was up 18.4 per cent year-on-year.
“Sales volumes in Sydney for the same period increased 24 per cent year-on-year.
“This momentum built through September and with the long weekend and grand finals now behind us, we expect spring activity to pick up where it left off this week.”
