September Market Smart: Growth Cools as Listings
Surge
Key Takeaways
- National Growth Slows: Home values across Australia rose by just 0.4% in September, showing minimal momentum in comparison to previous months. Quarterly growth was 1.0%, the lowest since March 2023, as the market begins to cool.
- Surge in Listings: Listings rose 3.2% from the same period last year and are now 8.8% higher than the five-year average, driven by seasonal trends. This increase is contributing to a softening in selling conditions.
- Capital City Disparities: Melbourne continues to struggle, with home values declining by 1.1% in the September quarter, while Perth leads with a robust 4.7% growth. Brisbane and Adelaide also showed strong quarterly growth, at 2.7% and 4.0%, respectively.
- Affordability Pressures: Affordability issues continue to bite, with lower quartile housing outperforming the upper quartile in terms of value growth, rising 12.4% annually compared to 3.8% for the upper segment.
- Rental Growth Peaks: The rental market is slowing, with national rents increasing by just 0.1% for the quarter. Some capital cities, like Sydney and Brisbane, recorded declines in rental values, signalling an easing of pressure on renters.
Current Market Trends
The Australian housing market has continued its trend of cooling growth through September. Nationally, dwelling values rose by 0.4%, which is down from the slight increase of 0.5% observed in August. Over the September quarter, growth slowed to 1.0%, marking the lowest increase since March 2023. This is coupled with a significant rise in property listings, which are now 8.8% higher than the five-year average, contributing to softer selling conditions as competition intensifies among vendors.
Perth remains the strongest-performing capital, with a quarterly increase of 4.7%, although this reflects a slowdown from the previous quarter’s growth of 6.2%. Adelaide followed closely with a 4.0% rise, and Brisbane recorded a 2.7% increase, its lowest quarterly rise since April 2022. Meanwhile, Sydney’s home values continued to inch upwards by 0.5%, though this is the city’s smallest quarterly increase since early 2023. Melbourne’s housing market, on the other hand, struggled with a -1.1% drop in values, its largest quarterly decline for the year. Hobart, Canberra, and Darwin also recorded quarterly declines, reinforcing the growing divergence between cities.
In regional markets, growth also slowed, with a 1.1% increase in dwelling values over the September quarter, down from 1.7% in the previous three months. Despite this, regional Western Australia led the way with a 3.6% rise, while regional South Australia and Queensland posted quarterly gains of 2.3% and 2.0%, respectively. These regional increases highlight the continued demand for affordable and attractive lifestyle options outside the major capitals, though the pace of growth is clearly tapering.
The increase in new listings has softened selling conditions, with auction clearance rates dropping to the low 60% range, about four percentage points below the decade average. Additionally, homes sold by private treaty are taking longer to sell, with the national median days on market rising to 32 days in September, compared to 29 days in June. These indicators suggest a cooling demand, which could further impact growth over the coming months.
Affordability remains a critical factor in the current market, with lower quartile dwelling values rising 12.4% over the past year, compared to just 3.8% for the upper quartile. This reflects a clear trend of buyers gravitating toward more affordable properties as borrowing capacity becomes constrained. Across the combined capitals, unit values outperformed house values in six out of eight capitals, or recorded smaller declines in cities like Melbourne, indicating a shift in demand toward more affordable housing types.
Rental Market
Rental growth has also peaked, with the national rental index rising by only 0.1% in the September quarter, its smallest increase in four years. Sydney, Brisbane, and Canberra all recorded slight declines in rents, signalling a further easing in rental market pressures. Slowing net overseas migration and a trend towards larger households may be helping to alleviate demand in the rental sector, while investor activity has increased to around 38% of new lending, potentially boosting rental supply.
Things to keep an eye on
- Consumer Confidence
Measures of consumer confidence remain subdued, both for the economy more broadly and for property market expectations. According to Westpac’s latest release:
- Westpac Consumer Sentiment dips 0.5% to 84.6.
- Renewed concerns the economy may be heading for a harder landing.
- Consumers less fearful of interest rate rises but more unsettled about jobs.
- More signs intense cost-of-living pressures are easing, but only gradually.
- Home-buyer sentiment improves slightly but diverging across states.
- House price expectations cooling in Victoria and New South Wales.
Source: Westpac, 2024
- Temporary Visas and International Students
The number of temporary visas in Australia has climbed by almost 500,000 from the pre-pandemic high:
According to a report published by the department of education:
“The Department of Home Affairs Number of temporary visa holders in Australia report (BP0019), 31 July 2024, shows 696,162 student visa holders in Australia. This represents a 91.3% increase in the number of student visa holders when compared to the 2021 census data…”
As a result of this growth, 7% of rental properties in the country are now occupied by international students. At the last census this figure was just 4%.
- Migration and Population Growth
Net overseas migration has moderated of late, yet remains at a very high level:
Despite a subsequent dip in overall population growth, the rate of migration has brought population growth back in line with pre-pandemic expectations:
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