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Usually, January would be the quietest month of the year when it comes to the Australian property market. That hasn't been the case in 2022, though, as a wave of buyers have moved in to send transaction volumes well above average.
According to CoreLogic's latest report, some markets are still experiencing major levels of growth, while others have eased right off from their 2021 peaks.
The past month saw the median Australian property price jump by another +1.1 per cent. That's pushed annual growth up to +22.4 per cent, the highest level seen in more than 30 years.
In just 12 months, the value of the median Australian home has risen by a staggering $131,236.
CoreLogic's January report shows that growth conditions have greatly spread out, though, with some markets surging and others winding down.
The second wind experienced by Brisbane and Adelaide has continued, with both cities gaining more than +2 per cent in January.
It's a different story in Sydney and Melbourne, where growth has slowed substantially. Even so, Melbourne has just cracked the $1 million median house price milestone for the first time.
Following a drop in December, Canberra rebounded in January, delivering a +1.7 per cent increase, and Hobart also saw a slight increase in growth from December.
Looking to Perth and Darwin, growth has continued to stagnate, although both cities saw around half a per cent bump over the past month.
The mixed bag dynamic between the capitals certainly hasn't been mirrored in regional markets, with every state turning in a healthy rate of growth that averages out to +1.8 per cent across the country.
After the end-of-year shutdown period the real estate industry usually experiences, it's typically expected that January is the quietest month of the year when it comes to sales.
That's not quite been the case to open 2022, though, as transactions have been well above average.
The volume of January sales across the country were up +39.4 per cent when compared to the five-year average.
This confirms there is still substantial buyer demand in the market, particularly in regional areas where transactions flew beyond the five-year average by +57.9 per cent.
Meanwhile, new stock coming onto the market has remained relatively low. The last quarter of 2021 saw an influx of new listings which eventually dropped off in December. That drop has carried over somewhat to January, with new listings being -7.1 per cent lower than the five-year average.
The high volume of sales and relatively low new listings count has pushed total stock on the market even further down. This is especially the case in Brisbane and Adelaide, where total stock is around -50 per cent lower than the five-year average.
Only Melbourne currently has total stock levels that sit around the average, which explains in part why growth has slowed significantly in the Victorian capital.
For the most part, the supply and demand dynamic still looks to be favouring sellers.
As the second half of 2021 unfolded, a divergence between the different capital cities became clear.
In Sydney and Melbourne, growth has slowed and stabilised significantly. Brisbane and Adelaide, meanwhile, have hit a second wind and have delivered incredibly strong quarters.
"A softening in growth conditions has been influenced by less government stimulus, worsening affordability, rising fixed-term mortgage rates and, more recently, a slight tightening in credit conditions, and a surge in new listings through the final quarter of last year," CoreLogic's research director Tim Lawless explains.
Rising affordability pressures in Sydney and Melbourne especially are a big factor. Wage growth hasn't nearly kept pace with the huge property price increases, and the ever-rising bar to save for a deposit is making it harder for buyers to break into those markets.
That affordability issue is less of a challenge in Brisbane and Adelaide, and that's attracted plenty of new buyers who are finding "remarkably low" levels of stock in the two cities.
In another case of divergence, the gap between unit and house prices in Australia has now reached a record level—the median house is now +28.3 per cent more expensive than the median unit.
CoreLogic notes that this vast difference could push buyers towards "the more affordable medium-to-high density sector of the market."
There may be different stories unfolding between the capital cities, but regional areas continue to storm upwards in unison.
Regional QLD and SA have both broken the +2 per cent growth barrier for another month, and the rest of the states have all delivered big results as well.
On an annual growth level, regional NSW's staggering +30 per cent gains have nearly been matched by Tasmania. QLD and Victoria are also far beyond the +20 per cent mark over the last 12 months.
While metropolitan markets soften further, the boom seen in regional Australia doesn't look like stopping any time soon thanks to a 'race for space' mentality, better affordability and broad lifestyle appeal for capital city buyers.
CoreLogic's report states that, "although the housing market is still moving out of the seasonal festive period slowdown, early indicators are showing housing market conditions are starting the year similar to where they finished in 2021."
In a nutshell, it looks like there is more price growth to come, but it's not going to be at nearly the same rate that we saw during last year's historic boom.
New listings are expected to increase, and the pressures of affordability in some markets should continue to soften gains as 2022 unfolds.
Mr Lawless explains that, "if levels rise and demand reduces, we should start to see vendors and buyers becoming more evenly balanced in the market, reducing the sense of FOMO that has been a key factor in pushing up prices through the pandemic."
Forecasts show Brisbane, Adelaide and key regional markets should continue to experience more bullish conditions than the likes of Sydney and Melbourne, which may be nearing the peak of their growth.
The big question is around when the Reserve Bank of Australia will hike interest rates. Inflation is rising, and it's predicted that rates could rise this year, which would substantially cool the housing market.
Combine that with an expectation of more listings coming online and affordability pressures hitting the ceiling, the supply and demand balance could shift away from sellers and closer to buyers, a dynamic that wasn't seen throughout 2021.
