Property values have now clocked up their fifth straight month of growth with all the signs suggesting prices may accelerate with the prospect of more interest rate cuts before the end of the year.
Nationally, monthly values increased 0.6% with bellwether markets Sydney (+0.6%) and Melbourne (+0.5%) both strengthening in terms of auction clearances.
Darwin was the fastest grower at +1.5% and Brisbane – recently anointed Australia’s second million-dollar market by industry researcher Cotality – saw values rise +0.8%. Only Hobart (-0.2%) fell into the negative.
While the Reserve Bank of Australia (RBA) continues to be cautious about cutting rates for a third time since February, financial analysts say there may be another two reductions before Christmas.
Critical signals for how the RBA might jump include global markets’ response to further US tariffs, domestic retail spending and accelerating jobs growth.
For the June quarter, national home values rose 1.4% – a full half-percent up on the March quarter (+0.9%). Values are higher in every region but Regional Tasmania (-0.4%).
To illustrate further how the market mood is changing, the December quarter finished at -0.1%.
By comparison, when prices were rising fastest during Covid, the market hit a quarterly growth rate of 8.1%.
Population growth is helping to fuel positive sentiment. For example, Perth has been the fastest growing market in terms of prices and it has also had the highest population growth rate (+3.1%) of any capital (2023–24). Melbourne and Brisbane recorded 2.7%, Sydney (2%) and Adelaide (1.5%).
Cotality research director Tim Lawless said: “The first rate cut in February was a turning point. Growing certainty of more cuts later in the year have further fuelled positive housing sentiment, pushing values higher.”
The current pace remained “mild compared to mid-2023 when the quarterly rate of growth in national home values peaked at 3.3%”.
If there is a note of caution, it’s in the sales volume. Cotality says it’s tracking at 4.9%, slightly down on the decade average of 5.1%. Fewer properties than average are being advertised currently, too. That number is down almost 17% on a five-year average.
With demand obviously strong, this level of supply is going to bolster values.
Mr Lawless agreed, saying: “Improved selling conditions can be seen in auction clearance rates, which have risen to slightly above the decade average.”
The most recent auction clearance rates have hit the 70-75% range in the capital cities.
Regional Australia continues a faster pace of quarterly growth (1.6%) than the cities (1.4%), but Cotality believes the metro areas will overhaul the regional centres before the end of the year.
The quarterly trend across the capitals was led by Perth (+2.1%) and Brisbane (+2%), the same markets that have led the five-year growth trend since June 2020 (+81.1%) and (+75.1%) respectively.
At 3.4%, the financial year change in national home values looks to be accelerating now. Annualising quarterly change implies a national annual growth rate of 5.8%, which is slightly above the decade average annual rate of 5.2%, says Cotality.