Weekly Market Update (21 June 2024)

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Weekly Market Update (21 June 2024)
  1. Rental Market (Source: CoreLogic)

    The pace of growth in Australian rental markets has slowed, with the national rental index rising by 0.7% in May, the lowest increase since December. Most markets have experienced reduced rental growth compared to the first quarter. Rental growth has eased, especially in the unit sector, but remains high at 8.5% annually. This slowdown may be due to easing net migration and rental affordability pressures. Gross rental yields have increased to 3.56%, offering a welcome development for investors, but many may still experience cash flow losses due to high interest rates.


  1. Multi-Speed Housing Markets (Source: CoreLogic)

    The Australian housing market has seen a 35.6% increase in home values since the start of the COVID-19 pandemic, with different cities experiencing varying levels of growth. Markets like Perth, Adelaide, and Brisbane have seen the highest growth, driven by factors such as low housing conditions and demographic trends. In contrast, Melbourne and Hobart have experienced more subdued growth. These trends are influenced by factors such as migration, affordability, and dwelling completions. Interstate migration trends have also had a significant impact, with QLD attracting a record number of people while NSW and VIC saw losses. Looking ahead, CoreLogic suggests that capital growth performance is likely to remain high in the short term, but may narrow in the longer term, especially as affordability becomes a key factor.


  1. Australian Home Prices (Source: PropTrack)

    The Australian housing market has remained strong despite significant interest rate increases over the past two years. Factors such as population growth, tight rental markets, and low supply of new homes have offset the impact of reduced borrowing capacity and affordability. National home prices have continued to grow, with Perth experiencing the highest increase. Markets with tight supply and strong demand have outperformed those with increased stock for sale. The report suggests that interest rates are not the sole factor influencing home price growth, and recent market developments emphasize the complexity of these influences.


  1. Forecasts (Source: Domain)

    The Domain FY25 Price Forecast Report predicts that home prices will continue to rise across Australia, with most capital cities expected to reach new record highs for both houses and units. This price growth is attributed to strong population growth, construction challenges, and increased borrowing power. The report indicates that by the end of FY25, house prices will surpass $1.7 million in Sydney and $800,000 in Perth, with other cities also expected to reach new record highs. Similarly, unit prices in various cities and regional areas are forecasted to reach new record highs.

    The forecast emphasizes that population growth, construction challenges, and borrowing power will drive price growth. It also highlights the scarcity of land, weak building approvals, and high construction costs as factors contributing to a limited supply of new homes. Additionally, upcoming tax cuts are expected to increase borrowing capacity and buying power, further driving up home prices.


  1. Cash Rate (Source: RBA)

    The Reserve Bank of Australia has decided to keep interest rates unchanged at 4.35 per cent for the seventh consecutive month, with the expectation of maintaining this level for at least another six weeks. Recent data showing a slight increase in unemployment aligns with the bank’s forecasts, leading to the belief that monetary policy is effectively impacting the economy. However, the outlook remains uncertain, with the Board stating that further rises in unemployment may be necessary to ensure inflation decreases. RBA Governor Michele Bullock emphasized the delicate and complex nature of the current economic cycle, expressing uncertainty about the path of interest rates and the potential for further rate hikes. The board did not discuss the possibility of an interest rate cut and does not anticipate a recession in Australia. Despite some economists suggesting a rate hike, the decision to maintain current rates was deemed appropriate due to concerns about cost of living pressures and the upcoming June quarter inflation figures. The RBA’s cautious approach contrasts with global central banks, possibly leading to a divergence in monetary policy.


  1. Home Price Trends (Source: Domain)

    The property market in Australia’s capital cities is expected to see a slowdown in price growth next year, with single-digit increases projected for most cities. Sydney, Brisbane, Adelaide, and Perth are set to break records, but Melbourne and Canberra are only expected to see minimal growth. Challenges such as consumer sentiment, unemployment, and affordability issues are likely to impact the market. However, supply shortages, population growth, and borrowing power are expected to continue driving home prices upward.  


  1. CoreLogic Auction Results (Week ending 16 June 2024)
    (Total Auction / Clearance Rate)

    – Sydney: 812 / 65.5%

    – Melbourne: 1,083 / 63.7%

    – Brisbane: 192 / 67.7%

    – Perth: 15 / 78.6%

    – Canberra: 57 / 63.2%

    – Adelaide: 115 / 79.1%

    – Tasmania: 2 / 0%

    – Combined Capitals: 2,276 / 65.5%


If you’re interested in staying updated on the Australian housing market, feel free to reach out to us. You can also follow our Facebook page and Instagram for regular updates on new listings, market trends, statistics, and insightful information.

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