Last month saw a small decline in the national housing growth rate, which was down 0.1% to 0.6% for April. While we are still seeing growth at the national level, the tide is clearly turning for the Australian property market. Sydney, Melbourne, and Hobart are leading this charge, having all recorded a decline in their monthly median property price.
For Sydney, the 0.2% decline across April marked their third consecutive month of negative growth numbers. In Melbourne, the decline may have been nominal (0.04%), but it means values have technically decreased for three of the last five months. And in Hobart, the 0.3% decline is their first monthly fall in median value in almost two years.
But it is not all bad news, with the remaining capitals all recording monthly growth of around 1% or more. Adelaide and Brisbane continue to be the strongest performing capitals, with both locations achieving annual growth of over 25%. However, it must be noted that even these markets appear to have moved through their cyclical peak growth rate.
Growth is also slowing outside the capitals, with regional property prices increasing 1.4% across April (compared to 1.7% in March). However, advertised stock remains limited (listings are down 42%) and demand remains high (sales are up 20%) in these areas. This disparity should help sustain growth in regional areas, even as other factors, like affordability issues, become more prevalent.
We are seeing the opposite trend on the rental side, with average rents up 9.0% for the year and 2.7% over the last 3 months. This is largely being driven by increasing renter demand for inner city units in Melbourne and Sydney. It is also supporting an improvement in gross rental yields, as growth in average rents outpaces housing value growth.
What lies ahead
The recent decision by the Reserve Bank of Australia (RBA) to increase the cash rate by 0.25% was largely unsurprising. But it does have many market watchers worried, with some commentators predicting plummeting property values and major increases in mortgage distress. However, there are a few factors that make forecasting what comes next a little more complex – this includes:
Suburb Spotlight: Indooroopilly (QLD)
Many inner city suburbs are mostly known for one thing, like their ultra-convenient location or thriving hospitality scene. But not Indooroopilly. Its broad appeal is based on truly offering a little something for everyone.
Sitting just 7km south west of Brisbane’s CBD, and featuring a long section of picturesque riverfront, Indooroopilly’s location is ideal. This is complemented by an enviable selection of shopping, dining, sporting, and transport options within the suburb. The area also has a strong community feel and residents enjoy easy access to some of the city’s most prestigious schools.
Understandably, with so much on offer, property in Indooroopilly comes at a premium, with the median house price clocking in at $1.35m. This has been driven by significant recent growth, with prices increasing by over 40% over the last 12 months. However, due to the high cost of houses in the suburb, rental yields are more modest, sitting at about 2.3%.
If rental returns are important to you, a unit may be a more suitable option. The median price for a unit in Indooroopilly has consistently sat at about $500,000 for the last couple of years. But while capital growth has been limited, demand for rentals in the area has seen yields push comfortably above 4.5%.
At Search Party Property, we specialise in developing tailored investment strategies and will work with you to come up with a suitable plan of attack. We also regularly assess your strategy ensuring that it is fit for purpose and delivering the desired results.