With the official arrival of the new financial year in Australia having been acknowledged on July 1, I thought this might be an ideal opportunity to look back at the performance of the Australian property market over the past year.
In conducting this review, it occurred to me that if we were all standing at the same point one year ago, knowing that 2023/24 would contain more rises in official interest rates and inflation continuing to track above the target of the Reserve Bank of Australia — with consumer confidence being dented by the combination of these two factors amid ongoing concerns about the cost of living — I suspect most people would have forecast a very different level of market performance to what has been recorded.
As I have mentioned in several of my articles in the past, I believe that the strongest indication of the solid foundations that underpin the Australian residential property market is that it continues to perform so positively in the face of these potential brakes.
The latest data from respected property analysts, CoreLogic, indicates that Australia’s dwelling values recorded a growth of 8% during the 2023/24 financial year. This figure was particularly relevant given that it more than recovered from the 2% decrease in values in the previous financial year when official interest rates were on the rise. The fact that the past year’s growth has occurred without any fall in interest rates says a lot about the underlying confidence in residential property in this nation.
Another trend we are noticing that should provide further assurance to investors is the consistency of growth nationally. The CoreLogic data indicates that dwelling values rose by 1.8% after growing by 1.9% in the March quarter and 1.8% in the last three months of 2023.
It is also worth noting that some state capitals have outperformed the national average by a substantial margin. For instance, Perth in Western Australia has led the way with a growth rate above 21% over the past year, reflecting a rebound in demand for property as the “fly-in, fly-out” workers in the mining industry have returned. Similarly, in Brisbane, Queensland, dwelling prices grew by over 15% in the same period as an increasing number of buyers began seeking out more “lifestyle”-based property in a warmer climate.
For those interested in regional markets as opposed to the metropolitan centres, the combined regional markets recorded 7% growth, slightly behind the 8.3% achieved by the combined capitals. Similar to the state-based figures, the regional markets in Western Australia and Queensland reported growth rates that were well above most other states.
As I have mentioned in previous articles, one of the driving forces behind the price growth has been an ongoing shortage of homes available for sale. For example, Perth’s market-leading growth in values coincides with severe supply shortages. The number of homes advertised for sale in Perth in June was 23% lower than the same period in 2023 and 47% lower than the previous five-year average. The Brisbane market is also reporting similar issues.
Of course, those capitals trailing the field have more property for sale. Melbourne currently has 14% more stock for sale than its five-year average, while Hobart’s listing numbers have been elevated for several years.
The other data source from CoreLogic that reinforces the message from the Home Price Index figures above is their “Pain and Gain Report”. If you haven’t heard of this one, it involves an analysis of around 85,000 property sales achieving a nominal gain or loss relative to the original price the property was paid by the current owner. In the March quarter of 2024, some 94.3% of transactions recorded a nominal gain, despite increased interest rates and a lack of property sales. This figure comprised 97.1% of houses achieving a gain, as opposed to 89% of units.
So, in summary, as I touched on earlier, the Australian property market continues to demonstrate an ongoing ability to defy what might otherwise be viewed as challenging conditions to produce pleasing growth in values for most states. With reductions in interest rates likely in the medium to long term, the outlook seems even more positive.
Astute property investors across Southeast Asia would do well to consider looking into the opportunities that this investment market offers.
Brandon Chuah is the director of Brand C - The Property Community