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Home values accelerate in the lead-up to spring

February 29, 2024
by
Andy Webb

Home values accelerate in the lead-up to spring

August brought another month of Australian property price growth — the sixth in a row according to the latest CoreLogic data

New listings have risen rapidly over the tail-end of winter, yet the pace of growth increased slightly, showing the depth of buyer demand out there in the market. 

Now that the spring selling season is officially underway, can that momentum continue? 

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National home values: August 2023

The median Australian home price got another +0.8 per cent boost in August, up slightly from the +0.7 per cent gain seen in July. 

That brings national growth since the February low-point to nearly +5.0 per cent. 

All but one capital city market saw gains over August. Source: CoreLogic

Sydney's strong run continued with gains of +1.1 per cent for the month. Melbourne also improved on it's July movements with a +0.5 per cent uptick. 

The largest growth was seen in Brisbane with +1.5 per cent. Adelaide and Perth hit +1.1 per cent and +0.9 per cent, once again taking both cities to new all-time high median prices. 

Hobart maintained its flat trajectory with a negligible dip of -0.1 per cent, Darwin bounced back with a gain of +0.8 per cent, and Canberra also improved slightly with +0.3 per cent. 

Away from the capital cities, regional markets still offered mixed results but saw an overall price lift of +0.1 per cent through August. 

Zooming out, CoreLogic's Research Director, Tim Lawless, noted that "Sydney has led the recovery trend to date with a gain of +8.8 per cent since values found a floor in January this year. Brisbane has also posted a strong recovery with values up +6.2 per cent since bottoming out in February."

He added that "At the other end of the scale, some other capital cities are better described as flat, with Hobart home values unchanged since stabilising in April, while values across the ACT have risen only mildly, up 1.0% since a trough in April."

Both buyer and seller activity ramped up over winter

After a nine-month-long supply drought that helped drive this year's strong price recovery, July finally saw new listings rise above five-year average levels as sellers re-entered the market. 

That trend continued in August. Mr Lawless commented, "We have seen vendors becoming more active though winter, which is seasonally unusual."

New listings are on an upward trend ahead of the busy spring selling season. Source: CoreLogic

With strong selling conditions and rising prices motivating sellers to get a head start on spring, new listings were +3 per cent higher than in August 2022 and +13 per cent above the five-year average. 

This served to test the strength of buyer demand, and despite having a fresh wave of stock to choose from, buyers moved quickly to soak up new listings. As a result, total listings on the market remained far below average. 

While new listings have risen, total listings are still far below average, suggesting buyers are out in force. Source: CoreLogic
"Most of this fresh stock is being absorbed by the market, with the count of total capital city listings rising by only +3.6 per cent over the past two months, despite the flow of new listings jumping +12.9 per cent," Mr Lawless said. 

The most significant uptick in new listings was seen in the ACT, Sydney and Melbourne. Perth, Adelaide and Brisbane meanwhile remained especially tight. 

Mr Lawless noted that "The balance between advertised supply and demonstrated demand will be a key factor influencing housing market outcomes in spring," saying demand would need to remain strong if substantial price growth was to continue. 

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Regional markets are still underperforming the capitals

Throughout the 2021 property boom, every state regional market outperformed its capital city counterpart, bringing staggering growth of, in some cases, more than +50 per cent. 

In 2023, those regional markets have generally seen a more muted recovery than the capitals. 

Capital city markets have recovered faster in 2023 but also came off of a deeper fall in 2022. Source: CoreLogic

Each state has its own unique path, though. Regional South Australia, Western Australia and Queensland are all at or near all-time high prices. 

Things have been a bit slower in NSW, Victoria and Tasmania, though. 

Regional markets delivered a mixed bag of results in August. Source: CoreLogic

"With internal migration trends normalising across regional Australia, and less demand side pressures from net overseas migration than in capital cities, regional markets generally aren’t seeing the same level of recovery," Mr Lawless said. 

He noted that historic ABS data shows that only about 15 per cent of overseas migrants land in regional areas, so the considerable population growth we've seen in 2023 so far isn't having such a big impact on regional markets. 

Instead, domestic migration is more key in elevating certain regional areas that have strong lifestyle appeal. This frequently includes coastal areas like the Sunshine Coast and Gold Coast as well as regions within commuting distance of the capitals. 

What's ahead for the Australian property market?

In September we've seen the RBA hold interest rates for a third consecutive month, leading a growing number of economists to believe that no further rate hikes are on the horizon. 

For many, the focus has shifted over to this year's spring selling season to see how the supply and demand dynamic plays out, as that will have a significant effect on where property prices go from here. 

CoreLogic's report described the housing market recovery as "firmly entrenched" thanks to six consecutive months of price increases, but "some headwinds remain apparent."

The leading headwind could be rising listings, particularly if buyer demand can't keep up as it has over the past two months.

Eleanor Creagh, Senior Economist at PropTrack, suggested in a recent newsletter that stretched affordability could once again work to slow down the rate of price growth seen so far in 2023. 

"But high levels of migration coupled with lower new supply and an emergent housing shortfall is likely to continue to cause prices to lift despite affordability remaining stretched," she said. 

"However, price growth is likely to remain stronger in the smaller capital city markets of Perth, Adelaide and Brisbane where housing is comparatively affordable, with demand bolstered by both interstate and overseas migration."

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1. CoreLogic News, 'Home Value Index shows housing recovery gains momentum in August as national home values rise 0.8%', 1 September 2023
https://www.corelogic.com.au/news-research/news/2023/home-value-index-shows-housing-recovery-gains-momentum-in-august-as-national-home-values-rise-0.8

2. PropTrack Newsletter, 'Prices are approaching a new peak - so how big was the downturn really?', 1 September 2023

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Disclaimer: Property reports contain property estimate data and information provided by RP Data Pty Ltd trading as CoreLogic Asia Pacific ABN 57 087 759 171 (CoreLogic) and OpenAgent Pty Ltd, which is general in nature. It is not a professional property valuation or advice to be relied upon. The actual market value of the subject property may differ. We and CoreLogic do not warrant the accuracy, currency or completeness of the data and information to the full extent permitted by law, each excludes all loss or damage howsoever arising (including through negligence) in connection with the information. You rely on the property estimate at your own risk.

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