Residential real estate continues to underpin Australia's wealth, estimated at a total  value of $11.1 trillion - significantly higher than the combined value of Australian superannuation funds ($4.1 trillion) and the Australian stock exchange ($3.3 trillion). 

However, the housing market has underperformed throughout 2024, according to  CoreLogic's Housing Chart Pack for January. 

CoreLogic Economist Kaytlin Ezzy said that when accounting for capital gains and  dividend income, the Australian equity market outstripped property in 2024, with  equities up 11.4% over the year, compared to 8.3% growth for property.  

"Despite uncertainty in the global and domestic economic outlook and the cost-of living crisis, the ASX reached a series of new record highs in 2024, buoyed by  moderating inflation, coasting economic conditions and a strong outing from the  banking sector."  

By comparison, the total return from the housing sector, which considers both value  growth and rental income, underperformed.  

"Despite showing some resilience in the first half of the year, the accumulation of  stock, and the higher for longer interest rate environment has seen the change in  dwelling values slow, and, in some cities, shift into negative territory."  

"Similarly, the normalisation in net overseas migration and the increase in the  average household size has seen rental growth continue to ease over the year. "  

She said these factors saw housing offer a total return of 8.3% over the 2024 calendar  year, down from the 13.5% total return seen last year and approximately three  percentage points below Australia's equity market.  

Investing is a long-term game 

Housing has outperformed equities in six of the past ten years and, cumulatively, has  delivered total returns of 132.6% compared to 126.4% over the past decade.  

"Whether it's housing or equities, it's normal to see some market volatility and both  booms and busts are part of the usual asset pricing cycle. Regardless of asset type,  time on the market has beat timing the market." 

Median days on market trends higher 

The Housing Chart Pack also found that after holding relatively steady around 28  days through much of 2024, the median time on market trended higher in the  December quarter, at 33 days.  

"Given current conditions are skewing in favour of buyers, it's unsurprising to see it  take a little longer to secure a sale as buyers take their time assessing their options,"  Ms Ezzy commented.  

Adelaide was the only capital to record a dip in the median days on market  compared to last year, falling from 29 days in the December quarter of 2023, to 28  days in Q4 2024.

Darwin and Canberra saw median selling times hold steady at 57  days and 44 days, respectively, while all other cities recorded an increase in median  selling time compared to a year ago. 

Vendor discount rate improves marginally  

Although selling conditions are deteriorating for vendors, with stock levels accumulating and selling time increasing, the median vendor discount rate tightened  slightly in 2024, from -3.8% in the final quarter of 2023, to -3.6% in the three months to  December 2024.  

"Although subtle, this suggests that sellers have been relatively realistic and are more  willing to meet the market when setting initial listing prices." 

"However, if stock continues to accumulate and values trend further downward, the gap could widen and vendors may have to offer larger discounts in order to secure a  sale." 

Rental growth continues to decelerate  

The national rental index increased by 4.8% in the year to December, a notable  decrease from the 8.1% rise observed in 2023 and the 9.5% growth recorded in 2022.  

Ms Ezzy said this could be attributed to the ongoing normalisation of net overseas  migration and the recent increase in average household size, both of which have  helped to ease rental demand. 

"With around 70% of overseas migrants renting when they first arrive, the continued  easing in the net overseas migration trend towards pre-covid levels have helped  alleviate the upward pressure on rents. 

Additionally, with rental affordability near record highs, more potential renters may be delaying leaving the family home or are looking to form larger share houses as a way  of distributing the additional rental burden." 

"Outside of the usual seasonal uptick through Q1, we would expect to see growth in  rents continue to lose momentum in 2025." 

Related Readings 

Weaker selling conditions reflected in auction clearance rates - CoreLogic | The Real Estate Conversation

Spring selling season proves a win for buyers - CoreLogic | The Real Estate Conversation

Three million additional strata units offer part of the solution to housing crisis - CoreLogic | The Real Estate Conversation

Apartment demand on the rise as housing affordability slips further - ANZ & CoreLogic | The Real Estate Conversation