Quarterly property update – June 2024

The recovery continues with a second place shake up

It’s been a positive quarter in the three months to May 31, albeit a period of slight to modest growth for most capital cities and the combined regions.

CoreLogic’s Home Value Index (HVI) rose 1.9 per cent nationally over the quarter, with Perth taking the top spot for growth after a 6.1 per cent increase in the median dwelling value. The West Australian capital also earns the gong for the best-performing city annually with a 22 per cent jump since May last year to a median of $736,649.

Melbourne, however, was the only capital to record negative dwelling growth with a -0.2 per cent move over the quarter taking the 12-month change to 1.8 per cent and a median of $780,437.

A second place shake up

Perhaps one of the most intriguing revelations of this month’s HVI was that there has been yet another changing of the guard on the totem pole of Australia’s priciest cities. As usual, Sydney still sits far out front with a median of $1.156 million.

Canberra had been in the runner up position, but after a bumper quarter of 3.9 per cent growth and annual movement of 16.3 per cent, Brisbane has taken the silver with a median value of $843,231, with Canberra taking bronze. According to CoreLogic figures, the Queensland capital hasn’t held this second position since 1997. Coming into the pandemic Melbourne’s median dwelling value held around a 37 per cent premium over Brisbane’s, and the ACT’s median was approximately 24 per cent higher.

Tim Lawless, CoreLogic research director, said extremely low levels of supply across the strongest markets provide the best explanation for the difference in growth rates. “The number of properties available for sale in Perth and Adelaide remain more than -40 per cent below the five-year average for this time of the year while Brisbane listings are -34 per cent below average,” Mr. Lawless said.

“Inventory levels in these markets remain well below average despite vendor activity lifting relative to this time last year. Fresh listings are being absorbed rapidly by market demand, keeping stock levels low and upwards pressure on prices.”

Prices moving forward

Unsurprisingly, the interest rate status and the imbalance in the supply and demand equation, are being tipped as the catalysts for future home price growth.

Eleanor Creagh, senior economist with PropTrack from REA Group, said in the May Home Price Index that with housing supply not keeping up with demand, national home values have now cycled through 17 consecutive months of growth according to their data.ⁱ

“Despite a rise in the number of homes for sale this year, strong population growth, tight rental markets, and home equity gains continue to bolster strong demand. Meanwhile, building activity remains challenged by capacity constraints and higher costs, with consequent tight housing supply pushing prices and rents higher,” she explained. “This mismatch between supply and demand is continuing to offset the higher interest rate environment. Further, current interest rate stability has sustained buyer and seller confidence, while ongoing home price rises are likely incentivising many to overcome affordability challenges and transact with the expectation of further growth.”

Dwelling values over the quarter

Melbourne

The Victorian capital posted a -0.2 per cent quarterly move according to CoreLogic figures taking the city’s median dwelling price to $780,000. Investors should take note that the gross rental yield figure for Melbourne now sits at 3.6 per cent.

Sydney

In the three months to May’s end, Sydney experienced a subtle dwelling value change of 1.2 per cent resulting in a median of $1.156 million. The gross rental yield for the Harbour City is currently the lowest of the capitals at 3.1 per cent.

Brisbane

Gaining momentum, the Queensland capital has taken the second most expensive spot for dwelling values at $843,231 after a quarterly rise of 3.9 per cent. Brisbane has recorded a gross rental yield of 3.8 per cent.

Canberra

Knocked off its second spot, the national capital had a modest 0.7 per cent increase during the quarter with the median now sitting at $840,100. For Canberra, the gross rental yield is 4.1 per cent.

Perth

By far the best-performing capital over the quarter, Perth jumped 6.1 per cent in three months taking its medium to $736,649. At 4.5 per cent, Perth has the second most impressive gross rental yield in the country, only behind Darwin at 6.5 per cent.