Australian property market
IMAGE: Adobe Stock
  • National dwelling values rose 0.4% in January
  • Regional Australia continues outperforming capitals for price growth
  • House sales volumes have defied worsening affordability

The Australian housing market’s upwards trajectory has continued into 2024, with CoreLogic data showing a 0.4% rise in national dwelling values this January. This marks the 12th consecutive month of value growth across the combined capital cities and regional areas.

Results remain diverse across states and cities though. While Perth, Adelaide and Brisbane continued posting solid 1%+ monthly gains, values slipped slightly in Melbourne, Hobart and Canberra.

At a granular level, houses continue to outperform units significantly. In fact, January 2024 has seen a record 45.2% difference in the median price of houses and units across the capital cities.

Tim Lawless, Research Director at CoreLogic, provides further evidence into the demand for detached homes over units, stating that “Since the commencement of the upswing, capital city house values have surged 11.0% higher while unit values are up 6.9%. It seems that most Australians are willing to pay a higher premium than ever for a detached home.”

Perth sees the strongest capital growth, while Melbourne and Sydney continue cooling

Perth’s housing revival keeps powering on, with home values up 1.6% in January. This equals the city’s robust monthly growth rate over the past quarter. With demand still outweighing supply, Perth values have surged nearly 17% over the last 12 months, and the Total Return is sitting at 22.2%, the highest across the country.

Despite this, Perth remains a competitive location with house prices still affordable compared to other Australian capital cities, at a median value of $676,823.

Conversely, Melbourne and Sydney – the two largest markets – posted more sedate results of -0.1% and 0.2% respectively this month. Tighter credit conditions and eroding affordability continue dampening activity in these previously red-hot markets.

Change in Dwelling Values As At 31 January 2024

Capital City  Month  Quarter Annual Total return Median value
Sydney 0.20% 0.10% 11.40% 14.60% $1,122,430
Melbourne -0.10% -0.90% 3.90% 7.40% $777,250
Brisbane 1.00% 3.20% 14.80% 19.50% $796,818
Adelaide 1.10% 3.70% 10.30% 14.80% $721,376
Perth 1.60% 4.90% 16.70% 22.20% $676,823
Hobart -0.70% -1.50% -0.40% 3.70% $651,807
Darwin 0.30% 0.70% -0.10% 5.70% $501,520
Canberra -0.20% 0.20% 1.20% 5.20% $842,971
National 0.40% 1.00% 8.70% 12.80% $759,437

Source: CoreLogic

Homes still selling despite housing affordability struggles

In positive news, the ongoing housing affordability woes appear not to have affected house sales, with the number of dwellings sold across the nation having increased by 11.9% between November 2023 and January 2024 compared to the previous 3 months.

“Despite ongoing cost of living pressures, high interest rates, low consumer sentiment and affordability constraints, homes are still selling. Housing demand has been buoyed by high migration, but also tight rental markets that have probably incentivised renters to transition towards home ownership if they can afford to do so.”

Tim Lawless, CoreLogic

Regional market outperforms capital cities

On a geographical basis, regional Australia’s outperformance continued in January. Combined regional values rose 0.4% for the month and 1.2% for the rolling quarter – faster than the capital cities’ 0.4% and 1.0% respective gains.

WA and Queensland’s regional markets remain standouts for growth, benefitting from an influx of metro housing demand. Regional NSW, Victoria and Tasmania recorded slight declines in 2023 while trending flat recently.

Rental growth accelerates into peak season

The tight rental market also saw further improvement in January. Nationally, rents were up 0.8% for the month – the strongest rise since April 2022. With competition typically increasing in the March quarter as students return and new year leases commence, it’s indicated that Australia may see even firmer growth as peak rental demand season gets underway.

Perth and regional WA are leading rental growth metrics, with Perth units and houses rising 3.7% and 3.5% respectively over the last quarter. Tighter conditions are driving gross rental yields higher across most areas, recovering from decade lows in early 2022.

Gross rental yields
Gross rental yields. IMAGE: CoreLogic

But the equation is shifting. Unit rent growth is now slowing below that of detached houses, especially in the largest cities of Sydney and Melbourne as immigration eases back from last year’s peaks.

Key 2024 market influences

Many crosswinds continue swirling around Australia’s housing market as we progress through 2024. One of these factors is the expectation that inflation will continue moderating, easing the cost of living pressures and improving consumer sentiment and their associated home purchasing activity.

Overseas migration reached historic highs last year, but is now steadying, which is expected to help ease the rental demand, particularly in the capital cities which typically have the higher rates of migration.


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