Australia's real estate industry is still booming as home values and rental rates are rising once again

Australia's real estate industry is still booming as home values and rental rates are rising once again

Although rents and home prices increased by 0.8% and 0.4%, respectively, in January, the nation's housing market remained diversified.

In the first month of 2024, the Australian housing market maintained its upward trajectory, with home prices rising by 0.4%.

Renters continued to feel the squeeze as housing costs increased; in fact, the national rental index had its largest monthly increase since April. After increasing 0.65% in December, rents increased by 0.8% in January.

Home values increased by 0.4% in December, which was higher than the 0.3% rises in November and December. This was the 12th straight month of price gains, according to data organization CoreLogic.

The performance of the housing market differed throughout the nation notwithstanding the main findings. Melbourne (-0.1%), Hobart (-0.7%), and Canberra (-0.2%) were the three capitals that had minor decreases throughout the month, although prices in Perth, Adelaide, and Brisbane increased at a pace of at least 1% per month.

Perth, which increased 1.6% in January, topped capital city growth, according to Tim Lawless, research director at CoreLogic.

Demand for homes in the western capital is outpacing supply, which has contributed to a 16.7% increase in prices over the last 12 months. Despite this, the average home price in most major cities is still less than $677,000. This means that housing costs are still comparatively reasonable.

January saw a record high of 45.2% between the average capital city house and unit prices, as home values continued to climb more quickly than unit values.

Individual home values in the combined capitals rose by 0.5 percent in the month, translating into a rise in average house price of around $4,800, while unit values grew by a more moderate 0.1%, or $900.

"Since the start of the boom, capital city home values have boosted by 11.0%, while the value of units have increased by 6.9%," Lawless said. "It seems that more Australians than ever are prepared to pay more for a detached home."

Compared to capital cities, regional markets were now exhibiting greater price growth patterns. In the current quarter, the combined capital index climbed by 1.0%, while the combined regional index increased by 1.2%.

"While both the combined capitals as well as combined regional markets have begun to lose price growth momentum, the capital city trend has slowed more quickly, largely due to the flattening of conditions for expansion in Melbourne and Sydney," Lawless said.

Regional markets in WA, SA, and QLD, among others, are seeing slower growth than their capital city equivalents. At the same time, property values in these three states are at all-time highs.

Over the previous three months, the number of homes sold was somewhat above normal, notwithstanding the decrease in the affordability of housing.

According to CoreLogic, 115,241 houses were sold in the three months that ended in January. This is 0.5% more than the previous five-year average for this time of year and 11.9% more than the same period last year.

Perth topped the list with a 3.7% rise in unit rent in the three months ending in January, leading the rate of rental growth in the current quarter, much like home prices.

The only capital city to see a dip in rents in the rolling quarter was Darwin, where house and apartment rentals dropped by 0.4% and 1.6%, respectively, while Canberra and Hobart reported poor rental circumstances the previous year.

According to Lawless, rent increases often occur between January and March. "It looks like we will see a similar trend this year as well as the usual pattern of greater productivity will emerge in January," he said.