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Market Snapshot: May 2024

Thursday, 6th June, 2024 // Property Market News

Welcome to our May 24 Property Market Snapshot.

May at a glance

  • Home Values saw a 0.8% increase, the 16th consecutive month of growth and the largest monthly gain since October last year
  • Perth, Adelaide, and Brisbane continue to lead this increase.

Dwelling values

May saw a 0.8% rise in the index, with mid-sized capitals leading growth. Brisbane’s consistent gains propelled it past Canberra as the second-most expensive capital city. This is a position it last held in 1997. The state also surpassed Melbourne’s median dwelling values. Sydney’s market reached its pre-pandemic peak in May.

The rate of growth in upper quartile home values continues to lag behind in comparison to other segments of the market across all capital cities except Darwin. This highlights the robust conditions observed in the more affordable price ranges. This indicates a preference towards these segments in the market.

 
Home Value Index June

Source: CoreLogic Hedonic Home Value Index, 3 June 2024.

Rental market

In recent months, there has been a notable deceleration in the growth rate of Australia’s rental markets. The national rental index only increasing by 0.7% in May, the smallest monthly change since December last year. This slowdown is noticeable across most cities, particularly in the unit sector. This indicates a broader easing in rental demand compared to the typically high demand experienced in the first quarter of the year. Despite this moderation, rents rose by 8.5% nationally over the past 12 months. Though this is a slower pace than seen in previous years.

Several factors contribute to this trend, including a gradual decrease in net migration since early 2023 and ongoing affordability challenges in the rental market. Furthermore, the completion of dwellings linked to the HomeBuilder scheme is anticipated to prompt homeowners to transition from rental properties to their newly constructed homes. Despite the slowdown in rental growth, gross rental yields have increased to 3.56% across combined capitals, the highest level since August 2019. This uptick in yields is advantageous for investors, particularly given the persistently high variable interest rates for investor loans. 

Change in rents - May

Source: CoreLogic Hedonic Home Value Index, 3 June 2024.

Outlook

Despite facing obstacles such as elevated interest rates, cost of living strains, and subdued consumer sentiment, the housing market demonstrates remarkable resilience. Values are persistently increasing across various regions and property types. This resilience stems from a gap between housing supply and demand. Although housing affordability deteriorates in many markets due to increasing dwelling values relative to income and extended saving periods for deposits, a substantial increase in dwelling completions is anticipated to be delayed by capacity limitations and labor shortages. Ultimately, the convergence of housing demand and supply is foreseen, propelled by decelerating population growth and heightened residential construction endeavors. However, during this interim period, upward pressure on housing values and continued affordability challenges are projected.

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Source: CoreLogic Hedonic Home Value Index, 2 April 2024.

 

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