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The recovery continues with a second-place shake-up. It’s been a positive quarter in the three months to May 31, albeit a period of slight to modest growth for most capital cities and the combined regions.

CoreLogic’s Home Value Index (HVI) rose 1.9% nationally over the quarter, with Perth taking the top spot for growth after a 6.1% increase in the median dwelling value. The West Australian capital also earns the gong for the best-performing city annually with a 22% jump since May last year to a median of $736,649.

Melbourne, however, was the only capital to record negative dwelling growth with a -0.2% move over the quarter taking the 12-month change to 1.8% and a median of $780,437.

A second place shake-up

Perhaps one of the most intriguing revelations of this month’s HVI was that there has been yet another changing of the guard on the totem pole of Australia’s priciest cities. As usual, Sydney still sits far out front with a median of $1.156 million.

Canberra had been in the runner-up position, but after a bumper quarter of 3.9% growth and annual movement of 16.3%, Brisbane has taken the silver with a median value of $843,231, with Canberra taking bronze. According to CoreLogic figures, the Queensland capital hasn’t held this second position since 1997. Coming into the pandemic Melbourne’s median dwelling value held around a 37% premium over Brisbane’s, and the ACT’s median was approximately 24% higher.

Tim Lawless, CoreLogic research director, said extremely low levels of supply across the strongest markets provide the best explanation for the difference in growth rates. “The number of properties available for sale in Perth and Adelaide remains more than -40% below the five-year average for this time of the year while Brisbane listings are -34% below average,” Mr Lawless said.

“Inventory levels in these markets remain well below average despite vendor activity lifting relative to this time last year. Fresh listings are being absorbed rapidly by market demand, keeping stock levels low and upward pressure on prices.”

    Prices moving forward

    Unsurprisingly, the interest rate status and the imbalance in the supply and demand equation, are being tipped as the catalysts for future home price growth.

    Eleanor Creagh, senior economist with PropTrack from REA Group, said in the May Home Price Index that with housing supply not keeping up with demand, national home values have now cycled through 17 consecutive months of growth according to their data.

    “Despite a rise in the number of homes for sale this year, strong population growth, tight rental markets, and home equity gains continue to bolster strong demand. Meanwhile, building activity remains challenged by capacity constraints and higher costs, with consequent tight housing supply pushing prices and rents higher,” she explained.

    “This mismatch between supply and demand is continuing to offset the higher interest rate environment. Further, current interest rate stability has sustained buyer and seller confidence, while ongoing home price rises are likely incentivising many to overcome affordability challenges and transact with the expectation of further growth.”

    Dwelling values over the quarter

    Melbourne

    The Victorian capital posted a -0.2% quarterly move according to CoreLogic figures taking the city’s median dwelling price to $780,000. Investors should take note that the gross rental yield figure for Melbourne now sits at 3.6%.

     

    Sydney

    In the three months to May’s end, Sydney experienced a subtle dwelling value change of 1.2% resulting in a median of $1.156 million. The gross rental yield for the Harbour City is currently the lowest of the capitals at 3.1%.

     

    Brisbane

    Gaining momentum, the Queensland capital has taken the second most expensive spot for dwelling values at $843,231 after a quarterly rise of 3.9%. Brisbane has recorded a gross rental yield of 3.8%.

     

    Canberra

    Knocked off its second spot, the national capital had a modest 0.7% increase during the quarter with the median now sitting at $840,100. For Canberra, the gross rental yield is 4.1%.

     

    Perth

    By far the best-performing capital over the quarter, Perth jumped 6.1% in three months taking its medium to $736,649. At 4.5%, Perth has the second most impressive gross rental yield in the country, only behind Darwin at 6.5%.

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    Note: all figures in the city snapshots are sourced from: CoreLogic’s national Home Value Index (June 2024)

    Important information – Oracle Advisory Group makes no representation or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. The information in this document is general information only and is not based on the objectives, financial situation or needs of any particular investor. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek their own professional advice. Past performance is not a reliable indicator of future performance. The information provided in the document is current as the time of publication.
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