National Housing Market Update - October 2024

In the September quarter, national housing values increased by one percent, marking the slowest growth in the national home value index since March 2023. This cooling effect is accompanied by varying trends across different capital cities, with some experiencing declines in dwelling values. For instance, Melbourne led the decline with a drop of 1.1%, followed by Canberra, Hobart, and Darwin, which also recorded lower values.

Let’s break down the performance of each capital city to better understand the current housing market dynamics.

Sydney’s home values saw a modest increase of 0.2% in September, marking the twentieth consecutive month of growth. However, this is the smallest rise since February 2023. Listings in Sydney are up by 7% compared to last year, which is 14% higher than the five-year average. This increase in inventory is giving buyers more options, reflected in the declining auction clearance rates and extended selling times.

Melbourne is currently in a shallow downturn, with values falling 1.1% in the September quarter. Since peaking in November of the previous year, the market has declined by 1.9% and is now 5.1% below the record highs from March 2022. The rise in listings, which is 8% higher than last year, indicates a shift towards a buyer's market.

Brisbane continues to show resilience with a 0.9% increase in September and a substantial 14.5% rise over the past year. Yet, the growth rate is slowing, with a quarterly increase of 2.7%, the lowest since April of the previous year. Listings are up 4% compared to last year, but they remain significantly below the five-year average.

Adelaide's housing values rose by 1.3% in September, maintaining a steady pace with a 4% increase over the quarter. While listings are beginning to rise, they still remain lower than last year, giving sellers an advantage. Homes in Adelaide are selling quickly, with a median of just 26 days on the market.

Perth's housing market continues to thrive, with values increasing by 1.6% in September. Though the quarterly growth rate has eased from 6.2% to 4.7%, the market remains favorable for sellers, with homes selling in an average of just 11 days.

Hobart has struggled recently, with dwelling values decreasing by 0.4% in September. Since reaching a peak in March 2022, the market has seen a significant decline of 12.5%. Despite a rise in listings, buyers have ample choice, resulting in longer selling times.

Darwin's market is slightly up by 0.1% in September, though it has experienced a quarterly decline of 0.7%. The unit sector is particularly weak, dragging down overall values. However, Darwin continues to offer the highest rental yields in the country, averaging 6.8%.

Canberra recorded a slight decline of 0.3% in September, contributing to a total drop of 0.9% for the quarter. The unit market is particularly weak, with values decreasing at a faster rate than houses. Both house and unit rents have also fallen, reflecting the overall cooling trend in the market.

The regional housing markets have also shown signs of easing growth. The combined regional index dropped from 2.3% growth in April to just 1% in the September quarter. Areas in Western Australia, South Australia, and Queensland are performing well, while regional Victoria and Tasmania are experiencing declines.

Rental growth has significantly slowed, with the national rental index rising by only 0.1% in the September quarter, the smallest change in four years. Major cities like Sydney, Brisbane, and Canberra have seen reductions in rents, attributed to easing overseas migration and affordability pressures. These factors are forcing a restructuring of rental demand.

The immediate outlook for housing markets suggests potential for further growth at a macro level, although a gradual loss of momentum and increasing diversity across cities is expected. Positive factors include improving sentiment amid slowing inflation and a likely cut in interest rates, which could boost borrowing capacity.

The Australian housing market is currently navigating through a period of mixed growth with various regions exhibiting different trends. As we progress through the spring selling season, the increase in listings may provide buyers with more opportunities, but sellers may face tougher competition. Keeping an eye on these trends will be crucial for understanding the future landscape of the housing market.

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