Australia’s housing market sees sustained growth

By Our Reporter
Representational image only // Photo by Luke van Zyl on Unsplash

Australia’s property market continues its upward trend, with home values rising by 0.6% in May, marking the 15th consecutive month of growth. This consistent increase is largely driven by a significant supply shortfall, exacerbated by high immigration rates and low levels of new construction. These factors have created a market where demand consistently exceeds supply, pushing prices higher across many regions.

Sydney’s property market remains robust, although dwelling values are slightly below their January 2022 peak. Over the past month, house prices have increased by 1.5%, while unit prices have seen a small decline of 0.7%. This mixed trend reflects the shifting dynamics within the city’s housing market, with buyers increasingly being priced out of houses and turning to more affordable units.

Melbourne stands out as the only capital city to have recorded a decline in housing values over the first four months of the year, down by 0.3%. The market is still 4.1% below its peak in March 2022. Despite this, Melbourne remains an attractive market for buyers seeking opportunities in a city that has otherwise seen consistent growth over the years.

In contrast, Brisbane’s housing market continues to show strength. Housing values have risen by 1.2% monthly and have achieved a significant 13.8% annual increase in house asking prices. Brisbane’s market dynamics indicate a strong demand and a consistent inflow of buyers, buoyed by the city’s appealing lifestyle and growing economy.

Adelaide has also experienced robust growth, with home values increasing by 1.3% in April. House asking prices have risen by 12.9% annually, reflecting the city’s stable economic conditions and attractive living standards. Similarly, Perth’s housing market has recorded a remarkable quarterly increase of 6%, with annual house asking prices up by 17.8%. This growth is the highest since early 2021, showcasing Perth’s strong market performance and economic resilience.

Hobart, which has been recovering from a prolonged slump, has seen home values rise by 0.8% over the past quarter. This increase indicates a slow but steady recovery in the city’s housing market, driven by a resurgence in buyer interest and economic activity. Both Canberra and Darwin have recorded modest increases in housing values. Canberra’s house prices rose by 3.2% monthly, while Darwin saw a slight uptick in April, indicating a stable market environment in these cities.

The ongoing supply shortfall, driven by high immigration rates and low construction activity, continues to exert upward pressure on housing prices. The total number of listings remains well below average, exacerbating the mismatch between supply and demand. This imbalance is a critical factor in the sustained increase in home values, despite various economic challenges.

Auction results have shown a slight increase in clearance rates across combined capital cities, rising to 71.5% last week from 71.1% the previous week. The number of auctions held was 2,163, slightly up from 2,146 the prior week, indicating steady auction volumes. This trend reflects the continued strong demand for properties and the competitive nature of the housing market.

Experts from CoreLogic highlight a shift in buyer demand towards units, particularly in capital cities where house prices have soared. This shift is driven by affordability concerns, as buyers are increasingly priced out of the market for houses and turn to units as a more affordable alternative. CoreLogic’s Eliza Owen predicts that the ongoing undersupply will keep home values high, despite high interest rates and low affordability. While the market is expected to grow, it will likely do so at a slower rate compared to the previous year.

Economic factors such as high interest rates, low sentiment, worsening affordability, and ongoing cost of living pressures are expected to pose downside risks to the housing markets. However, the persistent mismatch between supply and demand is likely to prop up housing values in the near term. This dynamic creates a complex market environment where growth is tempered by economic headwinds, yet supported by structural supply constraints.

The rental market has also seen significant changes, with national rental values rising by 8.5% over the past year. Gross rental yields have improved to 3.75%, the highest since October 2019. However, the high cost of living and interest rates continue to weigh down net yields for highly leveraged investors. This situation creates challenges for both renters and property investors, as affordability issues remain a significant concern.

The Australian property market continues to navigate a landscape marked by strong demand and limited supply. While economic challenges pose risks, the underlying supply-demand imbalance is likely to sustain property values in the near future. Buyers, sellers, and investors must navigate these dynamics carefully, balancing opportunities with the inherent risks of a market in flux.

Support independent community journalism. Support The Indian Sun.

Follow The Indian Sun on X | InstagramFacebook


Donate To The Indian Sun

Dear Reader,

The Indian Sun is an independent organisation committed to community journalism. We have, through the years, been able to reach a wide audience especially with the growth of social media, where we also have a strong presence. With platforms such as YouTube videos, we have been able to engage in different forms of storytelling. However, the past few years, like many media organisations around the world, it has not been an easy path. We have a greater challenge. We believe community journalism is very important for a multicultural country like Australia. We’re not able to do everything, but we aim for some of the most interesting stories and journalism of quality. We call upon readers like you to support us and make any contribution. Do make a DONATION NOW so we can continue with the volume and quality journalism that we are able to practice.

Thank you for your support.

Best wishes,
Team The Indian Sun