#5 - Australian Property Profits Big, Price Gap Widens Between Melbourne & Sydney, Unemployment Rate Holds Steady & Vacancy Rates Decline Slightly.
Sam Giardina - Mortgage Broker
Director & Mortgage Broker at Clio Financial | Available 7 days - 0422 269 868
Australian Property Market Sees Record Resale Profits in June Quarter 2024
Australian property owners achieved a median resale gain of $285,000 in the June quarter of 2024, marking a record high. CoreLogic's Q2 2024 Pain & Gain report revealed 94.5% of resales generated profits, with total gains reaching $31.8 billion. Brisbane was the most profitable city with a 99.1% profit rate, followed by Adelaide and Perth. However, Sydney and Melbourne saw higher rates of loss-making sales, particularly in the unit sector, where units were four times more likely to sell at a loss compared to houses. While regional areas outperformed capitals, some weaker markets like WA Outback North saw losses persist. The median hold period for resales was 8.8 years, and national home values rose 56% over this timeframe.
Melbourne House Prices Hit 20-Year Low Compared to Sydney as Price Gap Widens
Sydney's house price premium over Melbourne has reached historic extremes, with Sydney homes now commanding a 70% premium, making Melbourne’s median house prices 41% cheaper—a difference of over $600,000. Historically, Sydney has always been more expensive due to limited land availability, higher demand, and greater building costs, while Melbourne has consistently produced more housing.
Pandemic-related population losses and weaker price growth have caused Melbourne to underperform, now ranking behind Brisbane and Canberra in house prices. With more housing stock and higher taxes deterring investors, Melbourne continues to see price declines, widening the gap with Sydney. However, if Melbourne's prices remain low relative to Sydney, it could eventually be seen as undervalued, leading to a potential future narrowing of the gap.
Sydney, with its geographic constraints and international appeal, is expected to maintain a premium over Melbourne in the long term.
Australia’s Job Market Stays Strong with Steady Unemployment and High Participation in August 2024
Australia's unemployment rate held steady at 4.2% in August, as employment grew by 47,000 and the number of unemployed fell by 10,000, according to the ABS. The participation rate remained at a record high of 67.1%, reflecting strong labour market activity. The employment-to-population ratio also increased slightly to 64.3%, driven by higher employment for men. Despite the rise in underemployment to 6.5%, both underemployment and underutilisation rates remain well below pre-pandemic levels. The tight labour market persists, with demand for workers continuing to be strong.
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National Rental Market Faces Slight Vacancy Rate Decline Amidst Mixed City Trends
Over the 30 days leading up to September 12, 2024, rental prices across Australian capital cities experienced mixed trends. Brisbane, Perth, Hobart, and Canberra saw rental declines, with Canberra recording the largest drop of 1.2%. In contrast, Sydney’s house rents increased by 0.6% to $1,031.09 per week, while Adelaide and Darwin saw house rents rise, with Darwin experiencing a significant 9.6% surge. National median weekly rent now stands at $719.80.
Sydney and Melbourne’s vacancy rates held steady at 1.6%, while Canberra had the highest vacancy rate at 2.1%, and Adelaide the lowest at 0.6%. Despite slight improvements, the national rental market remains in shortage, with no immediate relief from the rental crisis expected in the near future. Although vacancy rates may continue to fall seasonally, rent increases are expected to ease compared to the sharp rises of the past few years.
Sam Giardina - Finance Broker - Clio Financial
PH: 0422 269 868
W: www.cliofinancial.com.au
DISCLAIMER: This article is intended for informational purposes only and does not constitute financial advice. The content is based on current market data and research but may not be applicable to your personal circumstances. Before making any financial decisions or taking action, you should consult with a qualified financial advisor.