Australia’s Property Market Reaches $11 Trillion Despite Slowing Growth
Australia’s residential property market has reached a remarkable milestone, with total values soaring to $11 trillion, marking a $900 billion increase over the past year. According to CoreLogic’s October Monthly Housing Chart Pack, this is the first time the property market has hit this staggering figure. However, the report also indicates that national home values rose by only 1.0% in the September quarter, the weakest quarterly growth since March 2023, reflecting a cooling market.
CoreLogic’s economist Kaytlin Ezzy highlights the factors contributing to this slowdown, stating, “While the market remains resilient in many areas, the pace of growth more broadly has clearly decelerated. Buyers and investors are becoming more cautious, and the current lending environment is leading to more measured purchasing decisions.” This sentiment resonates with the data, which shows an increase in listing volumes alongside a slight decline in total sales, indicating a shift in market dynamics.
Despite the overall cooling trend, several cities are experiencing robust growth. Perth, for instance, has reached record high values with an annual growth rate of 24.1%, driven by sustained demand and limited supply. Other cities, including Brisbane and Adelaide, have also recorded impressive annual increases of 14.5% and 14.8%, respectively. In contrast, Melbourne and Hobart have seen declines, with values down 5.1% and 12.5% from their peaks in March 2022.
Ezzy notes the impact of increased listings on market dynamics, saying, “The year-on-year increase in new listing volumes will have contributed to a deceleration in value growth as the market absorbs the additional stock.” The report indicates that new listings rose by 2.1% year-on-year, marking the strongest start to the spring selling season since 2021. Despite this influx, buyer demand remains solid, with total sales volumes still 10.5% higher than this time last year.
Interestingly, investor activity has surged, with investors accounting for 38.6% of new loan commitments, the highest share since 2017. Ezzy explains, “Along with capital gains, some investors are recognising the potential for long-term rental income growth, even as rental yields compress.” The national rental growth has slowed significantly, with rents rising by just 0.1% over the last quarter, the lowest rate in four years. This has resulted in gross rental yields compressing to 3.68%, down from 4.1% a year earlier.
As Australia’s property market evolves, the coming months will be crucial in determining the trajectory of home values and buyer sentiment. With new listings continuing to rise, potential relief may be on the horizon for buyers who have faced fierce competition over the past year.
References:
Melissa Fisher
Founder, Acuity Development Group & The Right Team