But growth is slowing as new listings rise
Australia’s residential property market has reached a new milestone, with the total value of real estate hitting $11 trillion for the first time, new data from CoreLogic has shown.
Despite the $900 billion increase over the past 12 months, national home values rose by only 1% in the September quarter, marking the slowest quarterly rise since March 2023. The annual growth rate has also slowed to 6.7%, down from a peak of 9.7% earlier in the year, indicating a cooling market.
Kaytlin Ezzy (pictured above), economist at CoreLogic Australia, attributed the slowdown in price growth to a rise in property listings and more cautious buyer behaviour.
According to CoreLogic’s latest Monthly Housing Chart Pack, Perth had the highest annual growth rate at 24.1%, driven by strong demand and limited supply. Sydney, Brisbane, and Adelaide also saw dwelling values reach record highs. Brisbane's values increased by 14.5%, Adelaide's by 14.8%, and Sydney's by 4.5% over the past 12 months.
In contrast, Melbourne and Hobart experienced declines, with values 5.1% and 12.5% below their record highs from March 2022, respectively.
Regional markets saw a 1% quarterly increase, down from 2.3% in the three months to April, reflecting a similar slowdown to that of capital cities.
“While the market remains resilient in many areas, the pace of growth has clearly decelerated,” Ezzy said. “Buyers and investors are becoming more cautious, and the current lending environment is leading to more measured purchasing decisions.”
New listings rose 2.1% year-on-year by early October, marking the strongest start to the spring selling season since 2021. However, total sales volumes have declined slightly from the previous year, although sales activity remains 10.5% higher than this time last year.
“The increase in new listings will have contributed to the deceleration in value growth as the market absorbs the additional stock. However, solid buyer demand remains despite changing market conditions,” Ezzy said.
Investors continue to drive a significant portion of buyer demand, accounting for 38.6% of new loan commitments, the highest share since 2017. This surge in investor activity comes as national rental growth slows, with rents rising just 0.1% over the quarter, the lowest increase in four years. Gross rental yields have fallen to 3.68%, down from 4.1% a year earlier.
Ezzy noted that the high level of investor activity is likely due to perceived opportunities for capital gains and tighter rental market conditions.
“Some investors are recognising the potential for long-term rental income growth, even as rental yields compress,” she said. “The increase in available stock is also creating more opportunities for investors to enter the market, which wasn’t the case during last year’s constrained conditions.”
However, this uptick in investor interest may increase competition for other buyer groups, such as first-home buyers, especially in capital cities where supply remains limited.
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