According to CoreLogic's October Monthly Housing Chart Pack, Australia's property market has reached a new milestone, with residential real estate valued at $11 trillion for the first time.
National home values rose just 1.0% in the September quarter, the weakest quarterly rise since March 2023. Growth has also slowed from a high of 9.7% to 6.7%, indicating a cooling market.
According to CoreLogic Australia Economist Kaytlin Ezzy, higher listing volumes and cautious buyer behaviour are to blame.
As a result of sustained demand and limited supply, Perth values hit a new record high and experienced 24.1% growth. Also at record highs are Brisbane, Sydney, and Adelaide.
Within the 12 months to September, Brisbane prices rose 14.5%, Adelaide prices rose 14.8%, and Sydney prices rose 4.5%.
Compared to March 2022, Melbourne and Hobart have recorded quarterly and annual dwelling declines, respectively, of -5.1% and -12.5%.
There was a 1.0% increase in regional housing markets in the three months to April, down from 2.3% in the three months to March. This deceleration was similar to that observed in the capital cities.
“While the market remains resilient in many areas, the pace of growth more broadly has clearly decelerated. Buyers and investors are becoming more cautious, and the current lending environment is leading to more measured purchasing decisions,” Ms Ezzy said.
New listing volume has surged 2.1% annually since October 6th, marking the strongest spring selling season since 2021, impacting values.
While sales volume has declined slightly from the previous year, sales activity remains 10.5% higher than this time last year.
“The year-on-year increase in new listing volumes will have contributed to a deceleration in value growth as the market absorbs the additional stock. The higher rate of sales indicates there’s still solid buyer demand despite changing market conditions,” Ms Ezzy said.
“As we move through spring, we’re likely to see further moderation in value growth as new listings continue to rise, providing some relief for buyers who have faced intense competition over the past year.”
With 38.6% of new loan commitments coming from investors, investors account for a significant portion of the strong buyer demand.
Rents rose 0.1% over the quarter, the lowest rate in four years, as the national rental market slowed. Accordingly, gross rental yields have declined to 3.68% from 4.1% a year ago.
The high investor activity is likely because of perceived capital gains, tighter rental market conditions and potential yield growth, according to Ms Ezzy.
“Along with capital gains, some investors are recognising the potential for long-term rental income growth, even as rental yields compress. The increase in available stock is also providing more opportunities for investors to enter the market, which wasn’t the case during last year’s constrained conditions,” she said.
“However, this trend could intensify competition for other buyer groups, such as first-home buyers, who remain active in the market. This increased investor activity could place further pressure on already limited supply levels, particularly in capital cities.”
