Australia’s Property Market continues to show positive signs of growth, as housing values across the country’s capital cities have risen by an average of 1.1% in June. This trend, highlighted by the latest data from CoreLogic’s national Home Value Index (HVI), marks the fourth consecutive month of value increase. Since stabilising in February, the national housing values have experienced a notable recovery, with a gain of 3.4%.
Australia’s Market is still on the path to recovery, as it currently stands 6.0% below the peak levels witnessed in April 2022. This translates to a median dwelling value that remains -$45,771 below the peak value of $768,777.
Sydney continues to lead the way. In June alone, property prices in Sydney surged by 1.7%, contributing to a substantial total growth of 6.7% since the beginning of the year. “In dollar terms, Sydney’s median housing values are rising by roughly $4,262 a week,” CoreLogic director of research, Tim Lawless, said.
With the exception of Hobart, all capital cities in Australia recorded gains in housing values. (See chart)
Why is the Home Value Index Important Matter for a Property Investor?
In Australia’s Property Market, the Home Value Index refers to a measure used to track changes in the value of residential properties over time. It is typically based on a weighted average of property sales prices and provides insights into the overall performance and trends of the housing market in specific regions or the entire country.
Market Performance: The Home Value Index provides information about the performance of the housing market, including price trends, growth rates, and market conditions. This data helps assess the overall health and stability of the market.
Investment Decisions: Helps identify areas or regions where property prices are rising or have strong growth potential. This information helps make informed decisions about where to invest their capital for optimal returns.
Risk Assessment: Monitoring the Home Value Index helps assess the risk associated with specific markets or regions. Understanding how property values fluctuate helps identify potential risks, such as market volatility or oversupply, and adjust investment strategies accordingly.
What factors contribute to the ongoing rise in Australia's Property Prices despite the aggressive rate hikes by the RBA?
Despite a series of significant interest rate increases by the Reserve Bank of Australia (RBA), the value of homes in capital cities is still on the rise. This raises the question of why this upward trend persists despite the tighter monetary policy. Several factors contribute to this phenomenon:
Persistent Demand: Despite the rate hikes, there is a sustained and robust demand for housing in capital cities. This strong demand is driven by factors such as migration, and shifts in housing preferences which continue to fuel the upward pressure on housing prices.
Limited Supply: A lack of available supply continues to be the main factor keeping upward pressure on housing values. “Through June, the flow of new capital city listings was nearly -10% below the previous five-year average and total inventory levels are more than a quarter below average. Simultaneously, our June quarter estimate of capital city sales has increased to be 2.1% above the previous five-year average.”, Tim Lawless said.
Australia's Property Prices will keep rising into next year, says Domain
According to Domain, the rise in real estate prices will continue throughout Australia and extend into 2024.
The forecast predicts that Sydney property prices could rise by 6% to 9%. This growth is attributed to the influx of migrants, particularly in Sydney, Hobart, and Adelaide, which is anticipated to fuel demand and accelerate property values.
The report suggests that some migrants may transition to homeownership sooner due to the tight rental market, seeking more stable housing alternatives. This, coupled with the perception of rentals as a favorable investment option, is expected to contribute to rising property prices.
Domain also projects price increases of 3% to 5% in Hobart and 2% to 5% in Adelaide, while Melbourne is predicted to grow between zero and 2%. (see chart)
Is it a good time to buy?
Given that we’re in a landlord’s market and things are unlikely to change anytime soon, many property investors are in a strong position right now. (If your financial circumstances allow). Another good question is, WHERE is it a good time to buy real estate in Australia?
High Income Property specialises in delving deep into the market to uncover hidden gems and lucrative investment opportunities. Trust us to guide you towards properties in prime locations that offer not only attractive rental returns but also long-term growth prospects. To discuss your options, schedule an online meeting or (02) 8007 4001