Australian Home Values Continue Upward Trend in April
Australian home values maintained their upward trajectory in April, with CoreLogic’s national Home Value Index (HVI) rising by 0.6%. This marks the 15th consecutive month of growth in the housing market, bringing the total increase to 11.1% or approximately $78,000 since the market’s low point in January of the previous year.
Interest Rates and Economic Forecasts
In a move that surprised few, the Reserve Bank held the cash rate steady at 4.35% last week. While interest rates are expected to remain elevated for an extended period, the timeline for potential rate cuts has been deferred to late this year or early next year.
However, the federal budget has brought some unexpected good news. According to Treasury predictions, inflation is decreasing faster than anticipated, with forecasts indicating it will drop to 2.75% by December. These figures will be formally presented in the budget announcement scheduled for Tuesday.
Strong Auction Results Reflect Market Strength
Last weekend’s auction outcomes highlighted the robustness of the property market. CoreLogic reported a preliminary auction clearance rate of 73.5% across the combined capitals, a slight increase from the previous week’s 72.9%, which was later revised down to 66.1%.
Sydney continues to lead the market with a strong preliminary clearance rate of 78.1%, albeit slightly lower than the previous week’s 78.3% (71.0% on final figures). Melbourne also saw an improvement, with early clearance rates climbing to 71.0% from the previous week’s 69.8% (62.5% once finalised).
Capital City Property Price Movements
In terms of property prices, the following trends were observed across major cities over the past week and month:
- Sydney: Property prices increased by 0.1% over the last week and 0.4% over the last month, showing an annual rise of 8.2%.
- Melbourne: Prices remained flat over the last week, decreased by 0.1% over the last month, but are up 2.4% year-on-year.
- Brisbane: Property prices rose by 0.4% over the last week and 1.1% over the last month, with a significant annual increase of 16.0%.
Overall, dwelling prices across Australian capitals increased by 0.6% over the last month, marking a 9.4% rise over the past year. The combined capital cities have seen a 10.2% increase in value over the last 12 months, defying earlier pessimistic forecasts of double-digit price declines predicted by the RBA and other bank economists.
Future Outlook for Property Prices and Rents
Looking ahead, it appears that property prices and rents will continue to climb throughout 2024. The current property cycle is being driven by a significant undersupply of quality properties relative to demand, pushing up both property values and rental prices.
Unfortunately, this undersupply issue is expected to persist. Experts agree that meeting the housing targets necessary to satisfy demand will be a significant challenge, suggesting that the current market dynamics will continue for the foreseeable future.
In summary, the Australian property market remains resilient, with home values continuing to rise amid a backdrop of stable interest rates and promising economic indicators. The ongoing undersupply of housing ensures that property values and rents will likely maintain their upward trend well into the next year.
