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Australian property values rose for a ninth consecutive month in October as the spring selling season continued to heat up.
According to the latest CoreLogic report, the national median home price should hit a new all-time high in November, but a number of headwinds are building.
Will prices continue to soar or are we about to see another momentum shift?
October delivered another strong lift across the country as the median Australian home gained +0.9 per cent in value.
Gains since January have now amassed to +7.6 per cent, restoring nearly all of what was lost in last year's downturn.
Sydney's thriving recovery continued with a further +0.8 per cent growth and Melbourne remained in a consistent upswing with +0.5 per cent.
Another standout month for Brisbane saw the Queensland capital break through to new record levels, joining Perth and Adelaide as the star performers in the second half of 2023. Adelaide also breached the $700,000 median value mark for the first time.
After a period of stagnation, Hobart saw a surprisingly positive turnaround in October, while Darwin and Canberra held more-or-less flat.
Things also picked up for regional markets which delivered combined gains of +0.7 per cent.
CoreLogic's research director Tim Lawless explained that a national all-time high would likely be set within weeks.
"At this rate of growth, we will see the national HVI reach a new record high midway through November, recovering from the -7.5 per cent drop in values recorded over the recent downturn between May 2022 and January 2023," he said.
Last year's spring selling season could broadly be described as a non-event, but in 2023 the warmer months have brought a more traditional influx of selling activity.
Looking nationally, new listings were +8 per cent higher in October than they were in the same month last year, though remained -7.2 per cent lower than the five-year average.
While new stock has been coming to the market, total available listings held well below average levels.
Through October, total stock was almost -19 per cent below the five-year average, suggesting that buyers are still seeing less choice out there in the market.
There's significant diversity across the states, though. Sydney, Melbourne, Canberra and Hobart have seen a clear lift in listings, while sellers still appear to be hesitant in Perth, Brisbane and Adelaide where prices are climbing rapidly.
Mr Lawless suggested that the markets where listings are rising quickly could begin to see a gradual shift of power back towards buyers.
"In markets where demand and advertised supply are more evenly balanced, it's logical to expect price growth to slow down," he said.
"In other markets such as Perth, where listings are almost -45 per cent below the five-year average while sales activity is almost 25 per cent above average, prices are rising at the fastest pace since March 2021.”
Regional markets have generally had a more muted year than their capital city counterparts, but last month delivered the largest price jump in 18 months.
The combined regions got a +0.7 per cent boost in October, with three states reaching new peak price levels.
"Despite the slower pace of growth, every rest of state region recorded a rise in home values over the month, except Regional Tasmania where values were flat," Mr Lawless said.
"Similar to the trend in the capitals, Regional Queensland, WA and SA are showing stronger conditions with each of these rest of state regions at record highs in October."
The Reserve Bank's November decision on where interest rates go from here could shake up the market's momentum.
The big four banks are all predicting one further 0.25 per cent rate hike, a move that could put a dampener on the market's strong run of gains so far this year.
CoreLogic's report also noted several other potential headwinds that could slow things down over the coming months.
Among them are consistently rising supply in a number of key markets, stretched affordability, and poor consumer sentiment.
"The wash-up is that we are likely to see a further reduction in the rate of growth in housing values over the months ahead alongside increased diversity in capital growth performance," the report read.
On the other hand, unemployment remains low and the housing market is broadly undersupplied, particularly for rentals, which has driven more tenants to become first home buyers.
A panel of ten leading economists surveyed by the AFR all agreed that prices would continue rising in 2024 — anywhere from a further +1.5 to +8 per cent — so the headwinds may not be enough to send the housing market south again.
For now, the national market appears to be relatively balanced between buyers and sellers, however, Perth, Brisbane and Adelaide are still strongly favouring sellers.
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