The latest CoreLogic Housing Value Index provides a comprehensive overview of Australia’s property market, highlighting both opportunities and challenges for homeowners and first-time buyers.

In May, the national home value index rose by 0.8%, marking the 16th consecutive month of growth. This represents the largest monthly gain since October last year. The growth was driven by mid-sized capitals, with Perth leading the way at a 2.0% increase, followed by Adelaide at1.8% and Brisbane at 1.4%. Sydney’s market also showed resilience, with a 0.6% rise, indicating a recovery phase.

Regional Differences

The regional markets displayed mixed results. While most regions saw growth, Hobart experienced a decline of 0.5%, and Darwin’s values fell by 0.3%. Brisbane’s housing market continues to show strength, overtaking Canberra to become the second-most expensive capital city in Australia, a position it has not held since 1997. Brisbane’s median dwelling value surpassed Melbourne‚Äôs, reaching $937,479 for houses and $615,429 for units.

Supply and Demand Dynamics

A critical factor driving these price increases is the low supply of available properties. For instance, listings in Perth and Adelaide are more than40% below the five-year average, and Brisbane’s listings are 34% below average. This scarcity is contrasted by Hobart, where listings are 41%above the five-year average due to lower demand.

Impact on Homeowners and Buyers

For existing homeowners, the continuous rise in home values translates to increased equity and potential gains in property investments. However, for first-time buyers, the rising prices pose significant affordability challenges. The national dwelling value to income ratio has increased to7.7, with the time required to save for a 20% deposit extending to 10.3 years.

Premium property

Upper quartile homes have shown the lowest rate of growth over the past year, everywhere but Darwin. Reduced borrowing capacity and affordability constraints are the reason behind prices rising 6.7%over the past 12 months versus 13.4% gains in the lower quartile.

Economic Factors and Future Outlook

Despite high interest rates, cost of living pressures, and low consumer sentiment, the housing market remains resilient. The mismatch between supply and demand continues to drive price increases. Even with new policy initiatives aimed at boosting housing supply, such as significant funding for social and community housing and infrastructure support, it will take time for these measures to materialise into increased housing availability.

The Reserve Bank of Australia (RBA) anticipates that affordability constraints and high construction costs will continue to affect the market in the near term. However, they expect dwelling investment growth to pick up by mid-2025.

Monthly change in capital city home value