March 2024 Property Market Update: Growth Continues

March 2024 Property Market Update: Growth Continues

As we dive into the latest insights from CoreLogic’s national Home Value Index (HVI), it’s clear that the property market is a dynamic landscape with its own unique rhythm and pulse.

Let’s unpack the highlights from March 2024 and what they mean for buyers, sellers and investors alike.

Growth Varies Across Cities

March marked the 14th consecutive month of growth in the national Home Value Index, with a 0.6% increase. Since February last year, there has been a remarkable 10.2% surge, equivalent to $71,832. This March, growth hasn’t been uniform across the country. While every capital city, except Darwin, showed a rise in dwelling values, the rates of change varied greatly.

Perth led the charge with a robust 1.9% increase, closely followed by Adelaide and Brisbane at 1.4% and 1.1%, respectively. In contrast, Melbourne stood out as the sole capital city to record a negative quarterly movement, down 0.2% in the year’s first three months.

Regional Markets Mirror City Trends

Just as in the capital cities, regional housing markets displayed a diverse range of growth conditions. Regional Victoria experienced softer growth, with values dipping by 0.3% in the year’s first quarter.

Rental Market Dynamics

In rental markets, the national rent index climbed 2.8% in the March quarter – its fastest pace since May 2022. Notably, unit rents outpaced house rents, growing by 2.9%, compared with 2.7%.

The uptick in rental prices also exerted upward pressure on rental yields, with gross rental yield reaching 3.75%, the highest since October 2019. Melbourne had a particularly sizeable increase in gross rental yields, attributed to falling dwelling values and surging rents.

Investor Activity And Outlook

Investors have been increasingly active, with total lending value up by 18.5% over the 12 months ending January 2024, compared with a 3.4% increase in owner-occupier lending. However, many new investors may face cashflow challenges, given prevailing mortgage rates, despite attractive rental yields.

Balancing Supply And Demand

The imbalance between housing supply and demand persists, further increasing housing costs. With residential construction approvals falling below the required rates and ongoing labour shortages and material costs, the market faces constraints on the supply side.

Population Dynamics And Affordability

Population growth remains an important factor, as Australia’s population increased by 2.5% over the year ending September 2023. With overseas migration peaking and housing affordability deteriorating, there’s a pressing need for more supply to meet demand.

As housing affordability worsens, there’s a potential shift in demand towards lower-priced properties, especially in outer-fringe detached housing markets and the multi-unit sector.

Looking Ahead

Despite challenges such as high interest rates and living costs, the outlook for the housing market remains positive. Anticipated interest-rate cuts could bolster borrowing capacity and consumer sentiment later in the year, potentially injecting further momentum into the market.

Addressing the supply-demand imbalance and improving affordability will ensure the market’s long-term sustainability and inclusivity.