Australia’s real estate scene kicked off the year on a high note, with property values nudging up by 0.4% in January, marking a full year of consistent housing market growth, according to CoreLogic’s latest Home Value Index. This uptick, an improvement from the 0.3% rises seen in November and December, has pushed the national median home value to $759,437. Sydney’s market saw a slight increase to $1,122,430 (up by 0.2%), while Melbourne experienced a minor dip to $777,250 (down by 0.1%).
Leading the charge in January’s price gains were Perth, Adelaide, and Brisbane, buoyed by their relative affordability, each seeing values climb by 1% or more. Perth, in particular, stood out with a robust 1.6% monthly growth, driven by a demand that continues to outstrip supply, catapulting its values by 16.7% over the past year. Despite this surge, Perth’s median dwelling value remains an affordable $677,000 compared to other capitals.
The report also highlighted a faster growth rate in house values compared to units, with capital city houses up by 11% since the market’s upturn began, against a 6.9% increase for units. Additionally, regional markets are now outpacing the capitals, with a 1.2% growth over the quarter, compared to the capitals’ 1.0%.
Looking ahead, factors such as inflation, interest rates, credit policies, consumer sentiment, and demographic trends are poised to shape the market’s trajectory through 2024.
Despite the current optimism, AMP’s chief economist Shane Oliver anticipates a “modest” 3 to 5% dip in property prices this year, citing high interest rates, a peak in immigration, diminishing savings, and potential unemployment increases as contributing factors. However, Oliver notes that the market is showing signs of stabilisation and resilience, possibly buoyed by expectations of interest rate cuts, which could soften the impact of any downturn. With the Reserve Bank expected to maintain rates in its upcoming meeting, Oliver predicts rate reductions could commence by mid-year, potentially igniting another upswing in the property market later on.
