Solid property price gains set to continue in 2024

Two new reports from leading data analytics firms show property prices are on track for another year of solid growth, with gains across the overwhelming majority of Australia’s cities and regions. 

CoreLogic’s national Home Value Index rose 0.6% in April, a repeat of the gains recorded in both February and March.

If that pace is sustained for the rest of 2024, home prices would close the year roughly 6.5% - 7.5% higher.

The month-on-month rise adds approximately $4,720 to the value of a median home in Australia, taking it to $779,817.

It’s the 15th straight month of gains in CoreLogic’s HVI, with housing values up 11.1% or approximately $78,000 since a trough in January last year.

Rival firm REA Group has also released its April figures.

Using a different methodology, its latest PropTrack Home Price Index report has found dwelling values lifted 0.23% to hit a new national median record of $774,000 in April, sitting 6.6% above April 2023 levels.

In the capital cities, PropTrack recorded 0.21% growth in April to a new median peak of $840,000, with prices now up 7.19% in 12 months.

CoreLogic’s analysis

Beneath its headline national figure of 0.6% growth in April, CoreLogic says it is seeing “multi-speed conditions”, with the mid-sized capital cities continuing to outperform their bigger and smaller rivals.

Perth again is the standout, with a 2.0% rise in home values in April to a median price of $721,278. Adelaide followed at 1.3% ($747,732) and Brisbane ($827,822) at 0.9%.

“We aren’t seeing any signs of heat coming out of the Perth housing market just yet, in fact, the quarterly pace of growth, at 6.0%, is approaching the cyclical highs seen during the pandemic when interest rates were at rock bottom,” says Tim Lawless, CoreLogic’s research director.

But Mr Lawless notes price growth is slowing in Brisbane.

“We are seeing the pace of gains slow across the Brisbane market, easing below the 1% mark to 0.9% in April for the first time in 12 months.

“Affordability pressures may be impacting the pace of growth across the city, following a nearly $300,000 increase in values since the onset of COVID in March 2020, the largest dollar value increase of any capital,” he says.

CoreLogic found steady growth in Sydney in April of 0.4% (median dwelling price $1,145,931), mirroring the pace of price increases in the previous three months, while Melbourne’s market dipped 0.1% to $783,261.

However, Tim Lawless believes the property market in the Victorian capital has “broadly stabilised after recording a subtle -0.8% dip over the three months to January.”

He also says the smaller capitals have emerged from “relatively soft conditions”, with both Hobart ($648,074) and Canberra ($847,604) recording three months of consistent, albeit small, rises in home values.

Interestingly, Tim Lawless says almost every capital city is recording stronger growth across the lower end of the market.

“The shift towards stronger conditions across lower value markets can also be seen between the housing types, with growth in unit values outpacing house values over the past three months,” he says.

Sydney is a classic example, with the lower quartile and the middle market showing the same quarterly change at 1.7%, compared with a much smaller 0.5% rise in upper quartile dwelling values.

CoreLogic’s national rental index rose 0.8% in April, which was a slightly lower rate of growth than previous months.

However, with the short supply continuing, Tim Lawless says, “It is likely rental growth will remain well above average for some time yet.”

PropTrack

PropTrack’s Home Price Index for April finds Perth and Adelaide remain the strongest-performing markets, with monthly price growth of 0.83% (to a median value of $678,000) and 0.55% ($730,000), respectively.

Perth prices have risen 20.16% over the past year, according to PropTrack, while Adelaide has grown 13.99%.

Like CoreLogic’s Tim Lawless, PropTrack senior economist Eleanor Creagh notes monthly growth in Brisbane is easing, but she says the Queensland capital remains one of the strongest performing markets over the past year.PropTrack recorded median home prices at $818,000—that’s 12.82% above April 2023 levels.

Eleanor Creagh says there are more properties on the market for sale this year in Sydney (up 0.25% in April to a median dwelling price of $1,081,000), which “has been matched by robust demand fuelling further price increases.”

However, she notes, “growth momentum has slowed since the beginning of 2024, with both monthly and quarterly growth easing in April.”

PropTrack also recorded a small fall in Melbourne’s median home price in April (down 0.1% to $805,000) though prices were still 1.10% up on this time last year.

Prices in the Victorian capital remain 3.39% below their March 2022 peak.

The take-out

Although their numbers do differ, both CoreLogic and PropTrack agree that Australian home prices will continue to rise, even in the face of continuing high-interest rates (with the official cash rate currently at a 12-year peak of 4.35%).

Following higher-than-expected inflation numbers, even the most optimistic of the “big 4” banks—the Commonwealth—has downgraded its expectation of Reserve Bank rate cuts this year.

Head of Australian economics at the CBA, Gareth Aird, says he’s now only expecting one cut of 0.25% to the cash rate in November, down from his earlier forecast of 3 cuts adding up to 0.75%.

Nevertheless, both CoreLogic and PropTrack don’t believe that “higher for longer” interest rates will have a major impact on home prices.

“Housing values are likely to be propped up by the mismatch between housing supply and demand, a situation that doesn’t look like it will change in the near future,” says Tim Lawless.

PropTrack’s Eleanor Creagh agrees:

“Strong population growth, tight rental markets, low unemployment and home equity gains are stimulating housing demand.

“Meanwhile, the supply side of the housing market has fallen short in responding to substantial demand.

“Building activity is at decade-low levels, exacerbating the housing supply shortage.

“As a result, prices are expected to remain on the rise in the months ahead.”