Prices rose every month in FY24, ending the year 8.0% higher
The Australian property market demonstrated remarkable resilience throughout the 2023/24 financial year despite challenging economic conditions, including persistent inflation and high interest rates. The ongoing undersupply of housing remained the primary driver for sustained growth in property values.
HOUSING VALUES
• Monthly Change: Nationally, prices rose by 0.7% in June 2024. In the combined capitals, values increased by 0.7%, while regional markets saw a 0.6% rise. Perth, Adelaide and Brisbane were the strongest performing cities.
• Quarterly Change: Nationally, prices rose by 1.8% in Q2, 2024. All markets saw gains except for Melbourne (-0.6%) and Hobart (-0.3%), which continue to face high listing levels.
• Annual Change: Prices rose by 8.0% nationally over the past 12 months. Perth led with a 23.6% increase, followed by Brisbane (15.8%) and Adelaide (15.4%).
• Median Value: Sydney maintained the highest median value at $1,170,152, followed by Canberra at $870,071 and Brisbane at $859,240. The national median now stands at $793,883.
MARKET TRENDS
• Market Diversity: Despite strong national growth, market conditions vary significantly by location, price point and property type. Western Australia, South Australia and Queensland are experiencing strong price growth due to tight market conditions, while Victoria and Tasmania are seeing softer conditions due to higher listing numbers.
• Affordability Driving Demand: Higher interest rates have reduced borrowing capacity, shifting demand towards more affordable properties. Lower quartile values are rising faster than higher-priced segments driven particularly by higher first home buyer and investor activity.
• Rents: Rental growth remains robust, with CoreLogic’s national rental index rising by 0.4% monthly and 8.2% annually. However, major capitals like Sydney, Melbourne and Brisbane are seeing slower rental growth in the unit sector due to affordability challenges and reduced international migration.
• Supply and Demand Dynamics: Despite an increase in new listings, total advertised stock remains 18% below the five-year average. Severe shortages persist in strong markets, with Perth listings 23% lower than last year and 47% below the five-year average and Adelaide (-43%) and Brisbane (-34%) also well below average. Melbourne (+14%) and Hobart (+46%) have elevated listing numbers.
• Higher Sales Volumes: Strong housing demand has boosted annual home sales by 8.6% compared to last year and 4.8% above the previous five-year average, with Perth recording a 29% increase.
WHAT IS AHEAD?
The market is expected to maintain its momentum over the next financial year due to constrained supply and strong demand. However, affordability constraints and potential mortgage stress due to higher-for-longer interest rates pose downside risks. Home values are likely to continue rising as listings and new supply remain below average levels relative to demand.
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