Quarterly Property Update – March 2024

Slowly but surely: Home values are on the way up

Home values across the country have largely settled into positive territory despite interest rates remaining elevated. Perhaps it’s the talk of impending rate cuts and easing inflation that has caused prices to inch up in every capital over the quarter, except for Melbourne and Hobart.

Values gaining momentum

In the three months to February 29, CoreLogic’s Home Value Index (HVI) reported national values had risen by 1.3%. Over the same period, the combined capital cities increased by 1.2% and the combined regions were up by 1.3%.

During the quarter, Perth surged ahead jumping 5.2% in three months taking the 12-month hike in the West Australian capital to an incredible 18.3%.

CoreLogic research director Tim Lawless said ongoing financial challenges haven’t overwhelmingly dampened the Australian demand for bricks and mortar.“Housing values have been more than resilient in the face of high interest rates and cost of living pressures,” he said. “The ongoing rise in housing values reflects a persistent imbalance between supply and demand which varies in magnitude across our cities and regions.”

Home values moving forward

Historically, the major capitals of Sydney and Melbourne do a lot of the heavy lifting when it comes to housing values. The HVI demonstrated that Melbourne values had just come out of a “three-month slump” to record a modest 0.1% rise in February and in Sydney values returned to positive territory by February after recording declines late last year.

“Potentially we are seeing some early signs of a boost to housing confidence as inflation eases and expectations for a rate cut, or cuts, later this year firm up,” Mr Lawless added.

However, Mr Lawless said multiple factors are holding the domestic housing market back from a “significant rebound”.“Affordability constraints, rising unemployment, a slowdown in the rate of household savings and a cautious lending environment, are all factors likely to keep a lid on value growth over the near term.”

Eleanor Creagh, senior economist at REA Group’s data business PropTrack, was more optimistic. “Housing demand is being buoyed by population growth, tight rental markets, resilient labour market conditions and recent home equity gains. Meanwhile, the sharp rise in construction costs and labour and materials shortages have slowed the delivery of new builds, hampering the supply of new housing,” she said.

Rents still on the rise

The start of the calendar year has always been a strong period for rental growth and the beginning of 2024 has been no exception. CoreLogic figures show national rental values had risen by 0.9% in February, the highest reading since March 2023. As a result, the rolling quarterly change in rents rose to 2.4%, the highest since May last year.

Dwelling values over the quarter

Melbourne

The Victorian capital has once again recorded a median dwelling value below Brisbane at $778,941 – sitting close to the national median of $765,762. The city saw negative growth across the quarter with a -0.6% change in dwelling values, however, this last month figures moved into positive territory, up 0.1%. The annual increase for Melbourne was 4%.

Sydney

Maintaining its place as the country’s most expensive city, quarterly figures show that the Harbour City had a very subtle movement in dwelling values rising only 0.6% to $1.128 million. The annual figure demonstrates a more impressive number having jumped 10.6% in 12 months.

Brisbane

Brisbane’s median home price is now $805,593 after a quarterly increase of 2.9%, but it is a longer term picture that showcases the Queensland capital’s impressive year in property. During the 12 months to February 29, median dwelling prices jumped 15.6%.

Canberra

Sitting in its relatively new position as Australia’s second priciest city for property, Canberra had a quarterly home price movement of just 0.3% taking the current median to $840,103. Over the past year, the nation’s capital rose by 1.6%.

Perth

Often proving to be a city that dances to the beat of its own drum, Perth has leapt streets ahead over other capitals with an annual home value surge of 18.3% to a median of $687,004. It has also been a strong quarter with a local home value growth of 5.2%.