Home Values Continue to Rise Nationally with Varying Performances Across Cities

The Australian housing market continues to show resilience, with home values increasing for the 19th consecutive month nationally. However, the performance of different cities varies significantly, with Perth leading the way in capital city growth, followed by Adelaide and Brisbane. Melbourne, on the other hand, has seen a decline in home values for six consecutive months. 
 
According to property researcher CoreLogic, Perth's median dwelling value has now surpassed Melbourne's for the first time since February 2015. Similarly, Adelaide's median is also higher than Melbourne's for the first time in CoreLogic's 40-year history. This shift reflects changing dynamics in the housing market driven by factors such as increased tax burdens on investment properties. 
 
CoreLogic's Head of Research, Eliza Owen, highlighted that while Perth, Adelaide, and Brisbane have shown strong growth recently, this may not be sustainable due to affordability pressures and tightening labor market conditions. Demand has shifted towards lower-priced properties, with unit values outpacing house values in most capital cities. 
 
In terms of supply levels across different regions, Melbourne has seen an increase in total listings compared to its five-year average, while Perth and Adelaide are experiencing declines of more than 40 percent. Despite demand still outstripping supply overall, according to CoreLogic’s report, there is a narrowing gap between them. 
 
Owen noted that affordability constraints are contributing to a broader slowdown in the housing market along with seasonal influences. While there was a modest increase in national home values over three months ending in August, she mentioned it was down from previous figures earlier this year. 
 
Looking ahead into 2025, interest rates will play a significant role in influencing house prices, according to CoreLogic forecasts. Owen stated that adding tight job markets will continue supporting mortgage servicing, but looser labor markets could pose risks. 
 
On another note, the rent index remained unchanged over two consecutive months; however, Sydney saw declines, marking the slowest annual growth rate since May last year except Hobart, which rebounded after a dip throughout. 
 
Although net overseas migration dropped, leading to fewer international student arrivals, KPMG projections suggest annual rent growth will be around 4-5 percent next year based on Treasury population forecasts for new dwelling completions. 
 
Overall, despite some challenges faced by the Australian housing market, recent data suggests continued resilience, expected moderate increases through the end next year powered by a by a longer-term lack of new supply constrained residential construction sector ongoing constraints tighter job markets support mortgage servicing further loosening key risk, said Owen. 
 
In conclusion, although Australia’s property sector shows signs slowing down short-term, a positive outlook remains supported. Underlying fundamentals like tight job markets, low interest rates, and long-term lack of supply all contribute to maintaining stability amidst uncertainty surrounding global economic trends impacting local economies. Investors and homeowners alike should keep close eye on developments, ensuring informed decisions regarding their investments or future plans related to real estate holdings.