Australian home values increased in August, but the pace of growth is showing clear signs of slowing, property data analysts Corelogic said this week.
Corelogic’s Home Value Index lifted 0.5 per cent during the month of August, for the 19th consecutive month of growth.
The pace of growth is showing clear signs of slowing, however, with the quarterly increase in national home values (1.3 per cent) now less than half the rate of growth in the same three-month period of 2023 (2.7 per cent).
There is still more demand for housing than available supply, but the flow of advertised supply and demand are becoming increasingly balanced, Corelogic’s research shows. Supply levels vary markedly from region to region, with total listings in Melbourne about 25 per cent higher than the previous five-year average, while total listings in Perth and Adelaide are down on the five-year average by more than 40 per cent.
Capital growth across the cities remains diverse. Monthly gains were led by a 2.0 per cent increase in Perth, followed by 1.4 per cent in Adelaide and 1.1 per cent in Brisbane. Monthly growth in Sydney was just 0.3 per cent, while four capital cities saw a monthly decline in home values, led by a 0.4 per cent dip in Canberra, 0.2 per cent in Melbourne and Darwin, and a mild 0.1 per cent fall in Hobart.
CoreLogic’s Head of Research, Eliza Owen, noted that while seasonality might have contributed to weaker value growth through winter, affordability constraints are a key factor behind the broader slowdown.
“The seasonally adjusted Home Value Index had a stronger result through the three months to August, at 1.7 per cent”, Owen said, adding that this is still down from the 3.3 per cent lift seen in the winter of 2023.
The research shows that ongoing outperformance of ‘cheaper’ markets reiterates a strain on demand. The lower quartile of the combined capital city market, which makes up the most affordable 25 per cent of dwellings, rose 2.7 per cent in the three months to August, compared to a 0.3 per cent lift across the upper quartile.
In a similar demonstration of demand being deflected towards lower price points, the quarterly change in unit values was higher than houses in five of the eight capital cities.
The median dwelling value in Melbourne has been overtaken by Adelaide and Perth, making Melbourne’s median the third lowest among the capital city markets. The Adelaide median is now $790,800 and Perth’s is now $785,250, compared with $776,044 in Melbourne. In August, Adelaide and Perth saw increases in the median dwelling value of $13,600 and $15,300 respectively, against a $3,100 fall in the Melbourne median.
Looking forward, the national housing market should continue to see modest value increases to the end of 2024, Owen suggests.
“While there is a clear slowdown in growth, housing values are underpinned by a longer-term lack of new supply, which has been exacerbated recently by ongoing constraints in the residential construction sector”, she concluded.