Everything you need to know about the state of Australia’s property markets in 20 charts – October 2023

Want to know what's happening to the housing markets around Australia?

Well, this monthly collection of charts from CoreLogic paints an interesting picture.

Our property markets turned the corner earlier this year, having now clearly moved to the upturn phase of the property cycle.

Despite 12 interest rate increases from the Reserve Bank of Australia, which have seen official rates rise by 4 per cent over the last year, property prices have kept rising, and the RBA's pause in hiking rates for the last two months and speculation of no further interest rate rises will only fuel our housing markets further.

However inflation is still a problem and Australia's economy is still growing a little too strongly for the RBA's liking, meaning the road ahead will not be without bumps.

While overall consumer confidence has taken a significant hit, home buyer confidence has improved and recently home sellers have re-entered the market but are not yet delivering sufficient properties to the market for sale.

Residential real estate underpins Australia's wealth

• The total value of Australian residential real estate was $10.1 trillion at the end of September 2023. This has been increasing month after month and has now reached a new peak quickly reaching its previous peak of $10 trillion.
• However, outstanding mortgages against all residential housing are only $2.2 trillion - a very comfortable 22% Loan to Value ratio.
• 56.6% of total Aussie household wealth is held in residential property - one of the many reasons neither the banks, the government nor the RBA wants a property crash.

Dwelling values continued to rise in September

• The combined value of residential real estate in Australia rose to $10.1 trillion at the end of September, up from from $10 trillion in the previous month and $9.9 trillion the month before.
• Dwelling values across the combined capitals rose 2.2% in the three months to September, down slightly from the 2.4% growth over the three months to August.
• Monthly increases across the combined capitals surpassed a 0.4% lift in the combined regional market over the month.
• The combined capital cities dwelling market value rose 0.9% in September, up from a 0.8% lift in August.
• Combined regional property values only rose 1.1% over the last 3 months.
• The positive trend in capital city home sales is a symptom of persistently low levels of available housing supply running up against rising housing demand. Buyers are becoming more competitive and there's an element of FOMO creeping into the market.
• However, our property markets are fragmented and while most segments growing, some are still languishing.

• National home values rose 2.2% in the three months to September, down slightly from the 2.4% growth over the three months to August.
• Home values increased 3.9% in the year to September. The annual change in home values moved into positive territory in August.

Our capital city markets are fragmented

But, as mentioned previously, within each state, our housing markets are fragmented, and the more expensive sectors of the market which led to the downturn are leading the upturn.

This is nothing new... the upper quartile of our housing markets has always been more volatile.

Each State is running its own race

• On the one hand, Perth property values are up 8.8% over the year and are now at a record high.
• On the other hand, Brisbane property values, which were one of the strongest markets during the recent property boom, increased 1.3% in the month of September but are still -0.6% below the record high, which was in May 2022.

• And in the previous darling of the housing markets - Hobart - house prices are -12.4% below their record highs recorded in March 2022.

Sales volumes are trending closer to a historic monthly five-year average

• CoreLogic estimates there were 39,216 sales in September nationally, slightly lower than the five-year average of 40,607 per month.
• The six-month moving trend suggests sales volumes are stabilising, despite being down from highs in 2021.

We've moved into a more balanced market

• The amount of time it took to sell property in the September quarter was 30 days nationally and has hovered around 30 days since the April rolling quarter.
• Regional Australia has seen a greater lift in time on the market year-on-year, which corroborates other metrics of softer market performance in the regions in the past 12 months.
• Median days on the market have continued to rise across the combined regional market, to 43 days in the three months to September.

Vendor Discounting

• At the median level, vendors are now offering less of a discount on their property.
• The median vendor discount nationally was -3.8% in the three months to September, up from a recent low of -4.3% at the end of last year.

Here's how many properties are for sale at the moment

• In the four weeks to 8th October, new listings totalled 38,428 nationally.
• New listings trended 9.7% higher through the start of the spring selling season
• New listings are lower -3.0% than the historic five-year average.
• The problem is that very few are A Grade homes or investment-grade properties . Owners of quality properties are still holding onto them.
• At the national level, there were 140,524 listings observed over the four weeks to October 8, 2023. Total listings are still trending lower than the previous five-year average due to strong absorption from sales.
• However, total listings are rising in some markets.

Auction clearance rates confirm the turn in the property cycle

• The combined capital cities clearance eased slightly through the month, averaging 65.2% in the four weeks ending 8 October. This was down from an average of 66.1% in the four weeks to 3 September.
• We update the weekly auction clearance results here each week.

We're experiencing a rental market crisis in Australia

• Australian rent values increased a further 0.7% in September, taking the national annual increase to 8.4%.
• Annual growth in rent values remains elevated on the previous decade's average and accelerated slightly in September.

• Gross rent yields were recorded at 3.71% nationally in September, up from 3.51% a year ago.
• As capital growth trends slightly outpace growth in rent values, there may be a compression in gross rent yields in the near term.

Dwelling approvals and housing credit

• Dwelling approvals jumped 7.0% in August, driven by an 8.8% lift in unit approvals and a 6.0% lift in detached house approvals.
• Overall, new dwelling approvals have been tracking around -21 % below the decade average since the start of the year, with high interest rates, land values and construction costs contributing to subdued development application levels.

• Through August, average new variable rates were 5.99% for owner-occupiers and 6.28% for investors.
• Average new fixed rates with a fixed term of more than 3 years are now trending higher for both borrower types.

Finance and Lending

• The value of home lending rose 2.2% through August, led by a 2.6% lift in owner-occupier housing finance, while investor finance rose a smaller 1.6%.
• However, the recent uplift in home lending is tentative. Monthly new home lending has declined in three of the past five months, and is down -9.4% year-on-year.
• Housing finance is a "leading indicator"? of what's ahead for our property markets - and increased loan approvals mean more property purchases moving forward.

Source of charts: CoreLogic Chart Pack, October 2023 .

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