1 day Ago By Eleanor Creagh
Spring is typically the busiest time of year for Australia’s real estate market for both buyers and sellers alike, as sellers prefer to list their properties when gardens are looking their best, and buyers are awakening from the cooler months. The PropTrack Home Price Index shows national home prices increased a further 0.2% across the country in August, now cycling through 20 consecutive months of growth, to sit 6.
2% higher than a year ago. With the home price uptrend persisting, sellers remain confident, and activity is warming up as the spring selling season kicks off. As a result, new listings volumes continue to trend higher and are set to surge even higher in the coming weeks as more properties hit the market throughout the selling season.
The stronger new listings environment has resulted in more choice for buyers with the total number of properties advertised for sale having increased from this same period last year. Buyers are taking advantage of the increase in choice and year-to-date preliminary sales volumes Australia-wide are 10.5% higher than the same period in 2023.
With more choice for buyers as well as a high probability interest rates will begin moving lower next year, it’s pointing to a busy spring selling season ahead, but results will differ city to city. Housing demand remains strong, defying affordability constraints and fueling continued home price growth across much of the country, though some markets have seen slight falls over the past year. Despite the higher interest rate environment, weak economic growth and subdued consumer sentiment, many homeowners are contemplating their next housing move following most seeing a significant increase in home equity after the significant price rises of recent years.
However, performance differs across the capitals with the balance between supply and demand a driving force behind that varied performance. Beneath the headline numbers it’s clear that conditions differ significantly across the capitals with the housing market running at different speeds, as Perth, Adelaide and Brisbane lead. While Melbourne, Hobart and Canberra bring up the rear.
This follows the same trend we’ve seen for much of the past 2 years - Perth, Adelaide and Brisbane have outperformed while Melbourne and Hobart have seen weaker conditions. In Hobart, Canberra and some parts of Melbourne total listings are more than 30% higher than the average seen over the past 5 years reflecting significant choice for buyers. Sellers in these markets are entering the spring season with a lot of competition from other sellers given the accumulation of total stock on market.
This likely indicates that buyers in these markets will hold the upper hand as spring progresses and the number of new properties hitting the market continues to lift through spring. In Melbourne buyers have consistently enjoyed more choice since mid-2023 with total listings sitting above historic average levels for the past year. In July 2024, total listings in Melbourne were the highest since November 2018 and 24% above the prior 5-year average.
This uplift in stock for sale is likely a contributor to the weaker price momentum seen over the past year in these markets. Inner Melbourne, the west and the Mornington Peninsula are the weakest performing regions with respect to home-price growth over the past year, and these are also the city’s most oversupplied regions. This is part of why conditions in Melbourne have been softer.
At the same time, construction rates relative to population growth in Victoria have been somewhat balanced compared to other parts of the country. Higher property taxes in Victoria are also likely to be playing a role – increases in taxes on investment properties have made owning a rental property less attractive on a relative basis. These policy changes have also deterred investor purchase activity, and Victoria is not attracting the same uplift in new lending to investors as other states.
In the middle is Sydney where some parts of the city are seeing large increases in the volume of stock on market while other areas continue to see demand outpacing the flow of listings hitting the market with total stock levels remaining close to historic average levels. Home prices in Sydney have lifted close to 6% over the past year but growth has varied across the city. In the top performing regions, Parramatta and the inner southwest, home prices are up close to 10%.
However, prices have risen more modestly in the Baulkham Hills and Hawkesbury and city and inner south regions, in both these areas total listings are close to 30% above the prior 5-year average. The increased choice for buyers in these parts of Sydney is a contributor to the slower growth relative to other parts of the city and these regions are likely to see buyers holding the upper hand as we head into spring. In contrast, across Adelaide and Perth, and in parts of west Brisbane, total listings are up to 50% below the average seen over the past 5 years, reflecting continued strength in buyer demand as the flow of new listings hitting the market are absorbed amid strong demand.
One reason these are some of the hottest markets in the country is relative affordability. Tight rental markets and population growth have also been a driver of strong demand. But in these markets low stock levels are intensifying competition fueling a strong seller’s market with ongoing fast price rises over the past year, with most of these historically undersupplied metro regions the top performing nationwide with respect to growth over the 12-months.
Although there’s set to be more choice for buyers as the spring selling season unfolds and new properties hit the market, there's likely to be more active buyers at the same time. And although stock levels are set to increase as sellers take advantage of solid conditions in these capitals, in the regions where total stock remains constrained, sellers are entering the spring selling season with a strong advantage. These factors are likely to fuel a continued faster pace of growth in regions where conditions for buyers remain highly competitive, such as Perth, Adelaide, and Brisbane’s affordable hotspots Ipswich and Logan Beaudesert.
In contrast, the strength in demand throughout spring is likely to be put to the test in historically oversupplied regions. These capitals are already recording a slower pace of growth, with prices flat or falling over the past year, and a continued uplift in choice will remain a key contributor to slowing home price growth..
