Everything you need to know about the state of Australia’s property markets in 20 charts – November 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 13 interest rate increases from the Reserve Bank of Australia, which have seen official rates rise by 4.25 per cent over the last year, property prices have kept rising.

While the RBA's rate hike in November will cause a bit more pain to mortgage holders, the lack of supply at a time of strong demand from our skyrocketing population 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 $10.2 trillion at the end of October 2023. This has been increasing month after month and has now reached a new peak.
• 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 October

• The combined value of residential real estate in Australia rose to $10.2 trillion at the end of October, up from from $10.1 trillion in the previous month and $10 trillion the month before.
• Dwelling values across the combined capitals rose 0.9% in October. While this is a slight acceleration on the previous month, monthly growth across the capital cities has broadly eased since a high of 1.5% in May.
• Combined regional property values only rose 1.5% 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 2.3% in the three months to October, easing slightly from the recent high of 3.1% in the June quarter.
• Home values increased 5.6% in the year to October, which is the highest annual rate of increase since July 2022.
• As you can see from the table below, the pace of growth in capital city is outpacing regional Australia.

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 initially led to the upturn.

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

But this chart shows how various segments of each capital city market are performing differently.

Each State is running its own race

• On the one hand, Perth property values are up 10.8% over the year and are now at a record high.
• On the other hand, Melbourne property values, increased 0.5% in the month of October but are still -3.7% below the record high, which was in March 2022.

• And in the previous darling of the housing markets - Hobart - house prices are -11.6% below their record highs recorded in March 2022.

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

• CoreLogic estimates there were 40,993 sales in October nationally, compared to a historic five-year average of 44,813 for the month of October
• The six-month moving trend suggests sales volumes are gradually lifting, despite being down from highs in 2021.

We've moved into a more balanced market

• The amount of time it takes to sell property trended slightly higher through the three months to October, with the median days on the market nationally sitting at 30 days.
• Selling conditions are stronger year-on-year across the combined capitals, with the median selling time sitting at 26 days compared to 30 days in the same period of 2022.

Vendor Discounting

• At the median level, vendors are now offering less of a discount on their property.
• The median vendor discount nationally was -3.6% in the three months to October, 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 November 5, new listings totalled 43,421 nationally.
• New listings have trended higher through winter and into the start of Spring, and are now 10.2% higher than a year ago, and -5.4% lower than the previous 5-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 155,478 listings observed over the four weeks to November 5.
• Total listings are gradually lifting off the back of a more substantial rise in new listings, and are 4.2% higher than a month ago.
• However, total listings are rising in some markets.

Auction clearance rates confirm the turn in the property cycle

• The combined capital cities clearance rate averaged 65% in the four weeks to October 29, which was steady in the previous four-week period.
• However, the week of the 29th saw a marked drop in the clearance rate to 62.9%. This coincided with the highest week of auction volumes since April last year.
• 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 October, taking the national annual increase to 8.1%
• Annual growth in rent values remains elevated on the previous decade's average but has shown signs of easing.
• Growth in rent values has eased most notably in regional Australia.

• The past five months have seen housing values once again rising faster than rents.
• This is leading to a slight compression in gross rent yields nationally to 3.69%, which is down from 3.71% in the previous month.

Dwelling approvals and housing credit

• Dwelling approvals fell a further 4.6% in September.
• For the less volatile detached dwelling series, approvals were down 4.0% over the past month but were still higher than a recent trough in January.
• Both house and unit approvals continue to trend well below historic decade averages.

• Through September, average new variable rates were 6.0% for owner-occupiers and 6.49% for investors.
• Average new fixed rates with a fixed term of more than 3 years are now notably higher than average variable rates for both borrower types.

Finance and Lending

• The value of new housing finance secured rose 0.6% in September, off the back of a 2.4% lift in August.
• This takes new housing lending up 9.5% since a recent low in February 2023.
• Since February, growth in secured housing finance for investors was 16.0%, compared to 6.1% in owner-occupier lending.
• 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, November 2023.

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