Dwelling values increased a modest 0.4% in the first month of spring, broadly in line with the monthly change in July and August at 0.3% as momentum continues to leave the market.

Nationally, housing values rose 1.0% in the September quarter, the lowest rise in the national Home Value Index (HVI) over a rolling three-month period since March 2023 when the market was moving through the early phases of the current upswing.

Demonstrating the diversity of housing conditions, four capital cities recorded a fall in dwelling values through the September quarter, led by Melbourne where values were down 1.1%.  Canberra, Hobart and Darwin also recorded declines over the quarter.

Sydney home values have continued to rise however the 0.5% increase through the September quarter was the lowest growth result since the three months ending February 2023 when values were down -0.3%. 

The mid-sized capitals, which have led the pace of capital gains through most of the upswing, are also losing momentum, although growth continues to significantly outpace other capitals.  Perth values were up 4.7% through Q3, easing from 6.2% in the June quarter.  The quarterly gains in Adelaide look to be topping out with a 4.0% rise through the quarter and Brisbane’s quarterly growth has eased back to 2.7%, the lowest rise over a rolling three-month period since April last year.

The slowdown in the pace of growth comes as home owners increasingly look to sell.  The flow of new listings coming onto the market was tracking 3.2% higher than a year ago nationally to be 8.8% higher than the previous five-year average for this time of the year.

“The rise in real estate inventory is a seasonal trend, with spring and early summer one of the busiest periods of the year for selling,” said Tim Lawless, CoreLogic’s research director.  “However, the flow of freshly advertised housing stock hasn’t been this high at this time of the year since 2021.”

Alongside the rise in real estate listings, we have also seen vendor metrics soften, signalling weaker selling conditions.  Auction clearance rates have wound back to the low 60% range across the combined capital cities, which is about 4 percentage points below the decade average.  Similarly, homes sold by private treaty are staying on the market longer, with a median of 32 days to sell nationally through the September quarter, up from 29 days in the June quarter and 27 days a year ago.

Looking at the rental market, the national rental index increased by just 0.1% over the September quarter, the smallest change over a rolling three-month period in four years.

The slowdown in rental growth is likely to be a factor of both easing net overseas migration alongside rental affordability pressures forcing a restructuring of demand.

“The latest demographic trends from the ABS showed net overseas migration reduced by 19% from the record highs in the first quarter of 2023.  The March quarter of 2024 saw 133,800 net overseas migrants arrive in Australia, 31,700 fewer than a year prior, helping to take some pressure off rental demand,” Mr Lawless said.

As rental growth eases more visibly than value growth, we have now seen five straight months where the national home value index has risen more on a monthly basis than the rental index, placing some renewed downward pressure on rental yields.

The immediate outlook for housing markets is for further growth in housing values, at least at the macro level, but a continuation in the gradual loss of momentum and increasing diversity across the cities and regions.

Upside factors for housing conditions include improving sentiment amid a slowdown in inflation, tight labour markets and a consensus that the next move in interest rates will be a cut.  Household balance sheets are also benefitting from tax cuts and energy rebates that could help to lift sentiment and borrowing capacity, while real income growth would be supported by a slowdown in inflation.

“A cut to interest rates is looking likely either early next year or even late this year, which will provide a boost to borrowing capacity and should help to support a further lift in confidence to make high-commitment decisions like buying a home,” he added. “However, other downside factors may at least partially offset these upsides.”

More CoreLogic readings 

RBA hold decision should be seen as a positive outcome - CoreLogic

Three capital cities record a fall in home values - Corelogic 

Winter school holidays see auction volumes drop - CoreLogic 

Just under 2,100 homes set for auction across the combined capitals - CoreLogic

Resilient Clearance Rates Despite Higher Volumes - CoreLogic