Everything you need to know about the state of Australia’s property markets in 20 charts – June 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 have clearly turned the corner earlier this year, having now moved to the next phase of the 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 not only stopped falling, but they are now on the rise.

The peak-to-trough change in Australian house prices was 9 per cent according to CoreLogic.

At the same time, Australia's economy is still growing 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 sellers have gone on strike not delivering sufficient properties to the market for sale.

And, based on recent auction results, the continual RBA interest rate rises have?not dampened buyer confidence.

Residential real estate underpins Australia's wealth

• The total?value of Australian residential real estate?was $9.6 trillion at the end of May 2023. This has been increasing month after month, but I still remember when this figure was closer to $10 trillion earlier last year.
• However, outstanding mortgages against all residential housing are only $2.2 trillion - a very comfortable 23% Loan to Value ratio.
• 56.1% 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 continue to rise in May

• CoreLogic’s national Home Value Index (HVI) has recorded a third consecutive monthly rise, with the pace of growth accelerating sharply to 1.2% in May.
• Sydney continues to lead the recovery trend, with home values rising by 1.8% over the month, and the rate of growth accelerating across every capital city.
• 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.
• Our?property markets ?are fragmented and while most segments growing, some are still languishing.
• Monthly increases across the combined capitals surpassed a 0.8% lift in the combined regional market over the month.

• Dwelling values in Australia are -6.8% lower over the past 12 months, picking up from an -8.0% annual decline in March and April.
• Combined regional property markets rose 0.8% over three months to May, and were down -6.9% over the last year.
• The highest annual growth rate in dwelling values among the regional and capital city dwelling markets was across Regional SA, at 9.5%. The lowest change in values was across Hobart where home values declined -12.6% in the past year.

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 upturn are leading the downturn.

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 2% 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 1.4% in the month of May but are still -9.4% below the record high, which was in June 2022.

• At the other extreme Hobart house prices are now -12.6% below their record highs recorded in May 2022.

Sales volumes are trending closer to a historic monthly five-year average of around 40,000

• CoreLogic estimates there were 38,860 sales in May nationally.
• This means sales are fairly on-par with what is typically observed at this time of the year, in other words, the long-term averages.
• The number of sales is down -21.5% over the year, though sales are easing from a period of particularly strong selling activity.

We've moved into a seller's market

• The amount of time it takes to sell property is starting to pivot suggesting we've moved from a buyer's to a seller's market.
• In the three months to May, the median days on the market are down to 34. Capital city homes are selling in a median of 29 days, down from 33 days in the three months to February 2023.
• Properties are taking notably longer to sell in regional Australia, with median days on the market up to 44 in the three months to May.

• In the three months to May 2023, the median vendor discount at the national level was -4.1%. Clearly, vendors are really not having to slash their prices, despite what the media tries to tell us.
• However, the median vendor discount across the combined capital cities has eased from -4.3% in the three months to October 2022, to -3.8% in the three months to May 2023 confirming the increasing strength of our housing markets.

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

• As the following chart shows, in the four weeks to June 4th 2023, new listings volumes remained low.
• With 30,583 newly advertised properties added for sale, new listings have seen a seasonal descent in recent weeks.
• New listings volumes remain low relative to previous years, -16.2% lower than its 5-year average.
• At the national level, there were 134,008 listings observed over the four weeks to 4 June 2023. Total listings are still markedly lower than the previous five-year average due to the relatively low volume of new selling decisions, against a normalising in sales volume
• Vendors are a little nervous and discretionary sellers are sitting on the sidelines, but there are still plenty of properties available for sale. The problem is that very few are?A Grade homes ?or?investment-grade properties . Owners of quality properties are holding onto them.

Auction clearance rates confirm the turn in the property cycle

• The combined capital cities' clearance rate rose strongly through the month, averaging 70.5% in the four weeks ending 28 May 2023, according to CoreLogic.
• We update the weekly?auction clearance results ?here each week.

We're experiencing a rental market crisis in Australia

• Annual growth in rent values slowed to 9.9% in the 12 months to May.
• The most rapid annual rise is evident in unit rents across Sydney, Melbourne and Brisbane, where rents have increased by around 15 to 18% annually driven by increased migration, and there is no end in sight as there is no increase in supply ahead to cope with the surging demand.
• On the other hand, while rents are still rising, growth in rents in regional Australia is slowing down.

Finance and Lending

• New housing finance secured in April totalled $23.3 billion, posting a monthly fall of 2.9% nationally.
• The largest monthly fall in housing finance was across the owner-occupier, non-first home buyer segment (-4.4%), followed by a -2.1% drop in first home buyer borrowing and a -0.9% decline in the investor segment.
• Investor finance comprised 33.8% of new mortgage lending through the month of April.
• First Home Buyer finance increased 14% over the first quarter of this 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, June 2023.

You can get more unbiased, expert daily insights in the area of property investment, success and personal finance by subscribing?here .