The pace of value growth continued to cool through the final month of winter, with CoreLogic’s national home value index rising by 0.5%.
Note: This was the 19th straight month of rising values at the national level, but the rate of growth is clearly slowing and now less than half the rate recorded at the same time last year.
Change in house prices, 12 months to September 2024:
Source: CoreLogic
At a high level, there’s still more demand for housing than available supply, but the flow of advertised supply and demand are becoming increasingly balanced.
Supply levels vary markedly from region to region, with total listing numbers in Melbourne now almost 30% above the previous five year average, while total listings in Perth and Adelaide are tracking close to 40% below the five year average for this time of the year.
Capital growth across the cities remains diverse but continues to be led by the mid sized capitals, with values arising at one to 2% each month.
Housing Trends Across Capital Cities
The monthly pace of gains across Sydney has slowed to 0.3%, while Melbourne, Hobart, Canberra and Darwin all recorded a monthly decline in home values.
The quarterly trend rate of growth eased in most capital cities through winter, which can be attributed to a combination of seasonality but also worsening affordability constraints, persistently low sentiment and lower borrowing capacity.
Rolling quarterly change in values, dwellings (Sydney, Melbourne, Brisbane, Adelaide):
Source: CoreLogic
While affordability is improving in markets like Melbourne and Hobart, where values are trending lower, it’s hard to see housing values continuing to rise at the same pace in the midsize capitals as affordability becomes increasingly stretched, particularly in the context of elevated interest rates, loosening labor market conditions and cost of living pressures.
The ongoing outperformance of cheaper markets reiterates the strain on demand.
The lower quartile of the combined capital cities market, which makes up the most affordable 25% of dwellings, rose by 2.7% in the three months to August, compared to a 0.3% 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, as buyer demand shifts towards the lower priced segments of the marketplace, supporting values at the more affordable end of the pricing spectrum.
August also marked a few changes in the hierarchy of housing values across the capitals, with the median dwelling value in Melbourne overtaken by Adelaide and Perth, making Melbourne’s median the third lowest amongst the capital city markets.
This is the first time that Perth’s median dwelling value has been higher than Melbourne since February of 2015, when Perth was coming off the highs of the mining boom.
It’s also the first time in CoreLogic’s 40-year median dwelling value series that Adelaide has had a higher median than Melbourne.
The higher median dwelling value in Perth and Adelaide relative to Melbourne is a combination of values moving in different directions, rising rapidly in Perth and Adelaide while falling in Melbourne.
But it’s also a compositional difference in housing stock, where a high proportion of medium to high-density stock in Melbourne tended to weigh down the median dwelling value in Melbourne.
About a third of homes are units, compared with about 16% of homes in Perth and Adelaide.
