May 2024 Property Market Update: Home Values Continue Upward
labelCategory: Property Market
In May, CoreLogic’s Home Value Index (HVI) showed a notable rise of 0.8%, marking the 16th consecutive month of growth. This increase is the largest since October last year, indicating a robust housing market recovery across various regions.
Here’s CoreLogic’s report in full.
State Performance Overview
This table provides a clear and concise overview of the home value changes and market conditions for each state in May.
| State | May Home Value Change | Description |
|---|---|---|
| Sydney | +0.6% | Home values in Sydney rose by 0.6% in May, showing a continued recovery and hitting new milestones since the market bottomed out last year. |
| Melbourne | +0.1% | Melbourne’s market experienced a modest increase of 0.1%, reflecting stable but slow growth compared with other capitals. |
| Brisbane | +1.4% | With an increase of 1.4%, Brisbane’s housing market has overtaken Canberra’s in terms of median dwelling values for the first time since 1997. |
| Adelaide | +1.8% | Adelaide showed impressive growth of 1.8%, driven by extremely low inventory levels. |
| Perth | +2.0% | Perth’s home values jumped by 2.0%, setting the pace among the capitals for the month. |
| Hobart | -0.5% | Hobart experienced a decline of -0.5%, attributed to higher listings and lower demand. |
| Darwin | -0.3% | Similar to Hobart, Darwin had a fall of -0.3%, indicating a challenging market environment. |
| Canberra | +0.5% | An increase of 0.5% in Canberra shows stable market conditions but a shift in its ranking among the capital cities. |
Regional vs Capital Cities
The combined regional markets recorded a 0.6% increase in dwelling values, slightly lower than the combined capitals’ growth of 0.8%. Regional areas continue to show resilience, with the annual pace of growth reaching 6.8%. In contrast, growth in the capital cities is more varied. Mid-sized capitals like Perth, Adelaide and Brisbane are leading the charge, with monthly increases of 2.0%, 1.8%, and 1.4%, respectively.
While the combined capitals experienced a higher overall growth rate than the regional markets, the performance disparity within the capitals highlights the critical role of supply constraints. Perth and Adelaide, with their low inventory, contrast sharply with other capitals like Hobart and Darwin, where higher supply levels have dampened growth.
Rental Market Overview
The national rental market’s growth has eased, with a 0.7% rise in May, the lowest monthly change since December last year. Despite this slowdown, rents are still up 8.5% year-over-year. The increase in gross rental yields, now at 3.56% across combined capitals, provides some relief to investors facing high interest rates. However, affordability constraints continue to support rental demand, particularly in the unit sector.
Market Forecast
Rising Rents: National rents increased by 0.8% in April, which is slightly lower than in previous months. Supply shortages and increased rental demand are likely to keep rental growth above average.
Supply Shortages: The ongoing mismatch between housing supply and demand will continue to support housing values, despite high interest rates and economic challenges.
Interest Rates Outlook: With inflation rising, economists forecast that interest rates could stay high for longer or even rise again, adding downside risk to housing markets.
Construction and Supply: Although new dwelling completions are lagging behind demand, an increase in residential construction activity could eventually balance the supply-demand mismatch, though this is expected to take time.
