Weekly Market Update (5 April 2024)

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Weekly Market Update (5 April 2024)
  1. Housing Supply (Source: AFR)

    The Australian housing market is experiencing a sharp decline in new home supply, reaching its lowest point in over a decade by 2026. This is expected to worsen housing and rental affordability issues and may hinder the government’s plan to construct 1.2 million homes by mid-2029. The decline is driven by planning bottlenecks, labor shortages, and rising material costs, posing significant challenges to the industry. Despite government initiatives and state-level interventions, the pressure on housing supply persists due to a booming population. As a result, house prices and rents are soaring, especially with dwindling greenfield lot releases in major markets. The industry faces multifaceted challenges, and experts emphasize the need for comprehensive reforms and targeted migration policies to attract skilled construction workers. Despite these obstacles, the unit market shows resilience, with prices growing and slight upticks in completions.

 

  1. Population Growth (Source: ABS)

    The ABS has released the 2022-23 population update figures, showing record growth with a focus on capital cities. Overseas migration is a significant factor, driving growth in areas such as Melbourne and Sydney, which also saw declines during the pandemic. The fastest growing areas are mainly inner cities, attracting overseas migration and students. Overall, capital cities experienced significant growth, while regional areas also saw some increases.

 

  1. Cash Purchases Report (Source: PEXA)

    The CoreLogic Home Value Index has increased by 8.9% over the past year, adding approximately $63,000 to the national median dwelling value, reaching an all-time high in February. A majority of house and unit markets across Australia saw values rise, driven by factors such as housing undersupply, strong net migration, and high demand. Rental growth has been significant, with nearly 40% of markets experiencing rental value increases of 10% or more annually. Brisbane, Adelaide, and Perth saw widespread value uplift year-on-year, while Sydney and Melbourne showed a tentative uptick in growth. The rental market also saw substantial increases, with Perth leading in annual rental growth. This growth is attributed to factors such as housing undersupply, strong migration, and high demand.

 

  1. National Housing Market (Source: Dr. Andrew Wilson)

    The national housing market has shown strong growth in both house and unit prices over the March quarter, with 13 out of the past 14 months reporting increased house prices. All capital cities have seen price increases, with Sydney, Melbourne, Brisbane, Adelaide, Perth, Hobart, Darwin, and Canberra all showing growth. The unit prices have also increased in all capital cities, with Perth, Brisbane, and Adelaide reporting the highest annual growth. The housing market is expected to continue to grow, driven by factors such as steady inflation and strong economy.

 

  1. Home Value Index (Source: CoreLogic)

    The national Home Value Index (HVI) increased by 0.6% in March, marking 14 straight months of growth. Since April 2022, the HVI has risen by 10.2%, reaching record highs. Most capital cities saw growth in dwelling values, with Perth leading at 1.9% increase. However, housing market conditions vary, with factors such as affordability, demand, and supply influencing trends. Regional markets also showed diversity, with regional Victoria experiencing a decline. Despite housing affordability challenges, demand has shifted towards the middle-to-lower value spectrum. Overall, the housing market has rebounded, with increased home sales compared to the previous year.

 

  1. Home Price Index (Source: PropTrack)

    The PropTrack Home Price Index report for March 2024 shows that national home prices hit a new record high, increasing by 0.34% in March and 1.57% so far this year.  Most capital cities experienced price growth, with Perth, Adelaide, and Brisbane leading the way. Smaller capitals outperformed, with Perth seeing the strongest annual growth. Regional areas also saw a rise in prices, with South Australia and Queensland leading the growth. Factors contributing to the demand for housing include population growth, tight rental markets, and favorable labor market conditions. The imbalance between supply and demand is expected to keep prices rising in the near future. Sydney, Melbourne, Brisbane, Adelaide, Perth, Hobart, Darwin, and Canberra all saw varying levels of price movement, with some cities reaching new peaks and others still recovering from previous declines. The overall property market remains fragmented, with different cities showing different levels of growth and recovery.

 

  1. Total Housing Listings (Source: SQM Research)

    In March 2024, the national residential property listings increased by 6.9%, reaching 256,000 dwellings. New listings rose by 6.2%, with 79,296 fresh property listings entering the market. Distressed property listings increased by 0.7%. The national combined dwelling asking prices rose by 0.3% from February to March 2024. Over a 12-month period, there are 2.6% more listings than in March 2023. Some states experienced significant decreases in distressed listings, while others showed increases. Despite the rise in activity, there is no oversupply situation, according to SQM Research. The national combined dwelling asking price rose to a median of $833,120.

 

  1. Rental Market (Source: CoreLogic)

    The national rental index has increased by 2.8% in the March quarter, with unit rents rising faster than house rents in the combined capitals. Melbourne has seen a significant rise in gross rental yields, attributed to a fall in dwelling values and a surge in rents. Despite high investor mortgage rates, there has been a substantial increase in investor activity in the housing market. Overall, the housing market is performing better than expected in the face of high interest rates and living costs. The outlook for housing values is positive, with an expectation of falling interest rates later in the year.

 

  1. Land Tax (Source: Stuart Wemyss)

    State governments have been sending out land tax notices to property investors, leading them to reassess their investments. The surge in land taxes is expected to worsen the rental crisis as investors may pass on the burden to tenants.

 

  1. The pandemic impact on Australian home prices (Source: PropTrack)

    The pandemic has had a significant impact on the housing market in Australia over the past four years. Despite initial fears of price falls, home prices have surged by 39.9% nationally, with regional areas outperforming capital cities in most states. Factors such as population growth, housing preferences, interest rates, and supply shortages have influenced the market. The surge in home prices has worsened affordability, especially for first-time buyers, while existing homeowners have seen equity gains. The housing shortage is further exacerbated by challenges in the construction industry, leading to a mismatch between housing supply and demand. As a result, governments are focusing on addressing housing shortages.

 

  1. CoreLogic Auction Results (Week ending 31 Mar 2024)
    (Total Auction / Clearance Rate)

    – Sydney: 414 / 68.8%

    – Melbourne: 283 / 60.3%

    – Brisbane: 95 / 60.6%

    – Perth: 5 / 20%

    – Canberra: 46 / 56.5%

    – Adelaide: 58 / 75.9%

    – Tasmania: NA / 0%

    – Combined Capitals: 901 / 64.8%

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