Australian housing markets continue to see multi-speed conditions, CoreLogic report finds

Australian home values have risen 35.6% since the COVID-19 pandemic hit in March 2020, but the market has been driven by multiple ‘speeds’ of growth across the capital cities and regional markets, according to a new special report from CoreLogic.

The report, titled “Unpacking Multi-Speed Conditions in Australia’s Housing Markets”, found that the highest-performing markets, such as Perth (+62.6%), Adelaide (+61.0%) and Brisbane (+59.8%), have generally come off a low base, with housing conditions and demographic trends relatively weak over the years preceding the pandemic.

In contrast, Melbourne (+11.2%) and Hobart (+28.4%) have seen more subdued growth, with the range of annual capital growth across greater capital city markets reaching 22.17 percentage points in the year to May 2024, above the decade average of 16.3 percentage points.

CoreLogic Head of Research Eliza Owen said the differences in capital growth trends were marked by the varied supply and demand balances of each city, with migration, affordability factors and dwelling completions influencing that dynamic.

“One way to show this relationship is the ‘sales to new listings ratio’, which is calculated by dividing the number of sales that have taken place over a given period by the number of new listings added to the market,” Ms Owen said.

“Sure enough, stronger market performers like Adelaide, Brisbane, Perth and Sydney have a sales to new listings ratio greater than 1. Melbourne and Hobart, where price growth has been subdued in the past year, have a sales to new listings ratio of less than one.”

The report also highlighted the impact of interstate migration trends, with QLD in particular attracting a record 51,517 people in the year to March 2022, while NSW and VIC saw deep losses.

“Part of the reason housing purchase demand may be softer across markets like Sydney and Melbourne, relative to Brisbane, Perth and Adelaide, could be because net interstate migration plunged to deep losses through 2021 and 2022 in NSW and VIC,” Ms Owen said.

Looking ahead, Ms Owen said the range of capital growth performance was likely to hold at relatively high levels in the next few months, based on strong fundamentals in the Perth market and ongoing issues of oversupply in some pockets of Melbourne and Hobart.

“Longer term however, affordability may once again become a draw card in some of the cities where price growth has been more subdued in recent years, especially as the value gap closes between cities,” she said.

“Considering the annual growth trend in the combined capital city market has also started to slow down, historic data trends suggests that the range of annual capital growth should also start to narrow.”