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Get Ahead in the Australian Housing Market: Growth, Slowdowns, and Strategic Investment

Australian housing market values continued to recover for the fourth consecutive month, with the national Home Value Index (HVI) rising by 1.1% in June. While this marks a slight deceleration compared to the previous month’s gain of 1.2%, it is still a positive trend.

Since reaching a floor in February, housing values have increased by 3.4%, but they remain 6.0% below the peak levels seen in April 2022. This means that the median dwelling value is still around $45,771 below the peak value of $768,777.

Australian Housing Market

Sydney Leads The Housing Market Recovery

According to CoreLogic, with the exception of Hobart, where dwelling values declined by 0.3%, all capital cities in Australia experienced a rise in housing values in June.

Sydney continues to lead the recovery, with home values increasing by 1.7% during the month.

Since January, Sydney’s housing values have recovered by a cumulative 6.7%, which translates to an average weekly increase of approximately $4,262.

Supply Shortage Drives Housing Value Growth

A lack of available housing supply remains the primary factor putting upward pressure on housing values.

Australian Housing Market

The flow of new capital city listings in June was nearly 10% lower than the previous five-year average, and total inventory levels are more than a quarter below average.

Additionally, the estimated number of capital city sales in the June quarter was 2.1% above the previous five-year average.

Slowdown In Growth Attributed To Changing Sentiment

Although housing values across most capitals continued to rise, the pace of growth slowed in June. This slowdown could be attributed to changing sentiment as expectations of higher interest rates have emerged.

Higher interest rates and lower sentiment are likely to reduce the number of active home buyers, helping to balance the demand and supply disconnect in the market.

Regional Areas Experience Slower Growth

While regional housing values have also increased, the growth rate is slower compared to the capital cities. The combined regional index has seen four consecutive months of growth, resulting in a 1.2% increase from the recent low in February.

The softer growth trend in regional areas aligns with shifts in demographic factors, as regional population growth has normalised over the past year.

Furthermore, housing demand from overseas migration is primarily concentrated in the capital cities.

Challenges In Regional Victoria

Regional Victoria is the only rest-of-state market where housing value trends remain negative. In June, housing values in this region declined by 0.4%, contributing to a 1.3% decrease over the quarter.

Value declines were observed across various sub-regions, including Geelong, Ballarat, and Bendigo.

These weaker conditions could be related to migration flows, as more regional residents move to the cities, and the affordability gap between regional Victoria and Melbourne has narrowed during the recent upswing.

Housing Values Below Peak Levels

Despite the recent recovery, most regions still have housing values below their previous cyclical highs. Hobart has recorded the largest cumulative decline, with values remaining 12.9% below the record high in May of the previous year.

Perth is the only capital city where home values have reached new record highs, having recovered from a relatively mild decline during the downturn.

Adelaide home values are only 0.3% below record highs and are likely to reach a new high point in July.

Regional Variations

Among regional markets, Regional NSW has seen the largest drop in housing values, with a decline of 9.6% from peak to the end of June.

This is followed by Regional Victoria (-8.4%) and Regional Tasmania (-7.2%). On the other hand, dwelling values in Regional South Australia and Regional Western Australia have mostly remained positive throughout the rate hiking cycle and reached new cyclical highs in June.

Understanding Growth Patterns and Seizing Opportunities

It’s important to recognise that not all suburbs are experiencing the same level of growth in the Australian housing market.

Some suburbs are witnessing rapid growth due to high demand, while others are stagnant or even declining.

This market within a market phenomenon highlights the urgency of making the right investment decisions.

Australian Housing Market

To ensure substantial capital growth, it’s crucial to purchase a property in a solid suburb with comprehensive analysis and research.

By identifying suburbs with high demand and limited supply, you can position yourself for significant gains in the future.

However, be aware that purchasing in the wrong suburb may result in a prolonged recovery period.

About the author

Amir Sehat is the chief property adviser and buyer advocate at Property Demand, known for his data-driven approach to researching 15,000 suburbs across Australia to identify booming suburbs as investment destinations.

A fun fact about him is that his deep knowledge and enthusiasm have earned him the nickname 'Property Nerd'.

He provides expert advisory and advocacy services to a wide array of clients, including:

- Property investors seeking to purchase high-growth and high-cashflow properties.
- Home buyers looking to avoid costly mistakes and save time
- Property sellers aiming to achieve the highest selling price


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