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Dwelling values and sale volumes continue to rise across Australia but rental yield declines, says CoreLogic

CoreLogic has released their August insights, summarising Australian housing market data to the end of July 2021.

They found the Australian housing market has continued to maintain the highest dwelling values since 2004, but quarterly values have started to gently decline, when compared to May 2021.

Sales volumes also rose across Australia, both in regional and metro markets. Rental values have also risen to the highest rate since December 2008.

However, rental yield saw a significant decline, primarily due to the growth in purchase values.

Australian wealth

CoreLogic data indicated residential real estate underpins Australia’s wealth.

Residential real estate’s combined value climbed to $8.8 trillion by the end of July 2021, while commercial real estate was worth $978 billion.

Comparatively, the total worth of Australian superannuation was $3.1 trillion and Australian listed stocks were worth a total of $2.8 trillion.

CoreLogic also noted there is $1.9 trillion of outstanding mortgage debt in Australia, with 54.3 per cent of a household’s wealth held in their property portfolio.

There were 596,622 sales per annum, totalling a gross value of $404 billion.

Australian dwelling values

Quarterly changes

Australian dwelling values rose 5.9 per cent in the three months to July. However, this is down from a recent peak of 7 per cent in the three months to May 2021.

Combined regional dwelling values rose by 5.7 per cent, while combined capital dwelling values rose to 6 per cent.

CoreLogic indicated the current cycle will continue to be fairly synchronised, as quarterly dwelling growth rates are now slowing down in most capital cities. This is reportedly a reflection of increased affordability constraints easing demand for housing.

Regional Western Australia was the only state that saw a drop in dwelling values, by 0.4 per cent. However, Perth still saw a 1.6 per cent rise in dwelling values.

Across regional and capital markets, Tasmania saw significant rises in dwelling values, with 6.6 per cent and 8.2 per cent respectively. Hobart showed the sharpest rise out of all capital cities.

New South Wales saw the sharpest rise in regional sectors with seven per cent. Despite lockdowns, Sydney still saw a 7.7 per cent rise in dwelling values.

The high end of the dwelling market continued to lead housing growth in Australia’s largest cities in the three months to July. The low end of the market led growth across Perth, Hobart and Darwin.

dwelling values quarterly
Source: CoreLogic

Annual changes

Australian dwelling values rose by 16.1 per cent in the last 12 months to July, the highest annual growth rate since February 2004.

In the last 12 months to July, the combined capital city home values rose 15.1 per cent. Combined regional housing markets increased by 19.6 per cent.

Canberra (20.5 per cent), Darwin (23.4 per cent) and Hobart (21.9 per cent) each had annual dwelling growth rates of over 20 per cent in the last 12 months.

Regional Tasmania (22.6 per cent) and NSW (22.9 per cent) saw annual dwelling growths rates of over 20 per cent in the same period.

Sydney dwelling values went up by 18.2 per cent in the past year, maintaining a record high.

Melbourne, Adelaide and Brisbane’s annual dwelling values are also at a record highs, increasing by 10.4 per cent, 15.7 per cent and 15.9 per cent respectively in the past year.

However, Perth’s annual dwelling values are now 13.8 per cent below the record high, which was in June 2014.

Similarly, Darwin’s annual dwelling values are 15.3 per cent below the record high, which was in May 2014.

dwelling values annual
Source: CoreLogic

Sales volumes

CoreLogic estimated sales volumes increased 42.4 per cent nationally over the past 12 months to July. Sales volumes are sitting well above the five-year average.

Transaction volumes through to July were estimated to be 42.6 per cent above the five-year average.

Combined capital sales volumes rose 37 per cent, while combined regional sales volumes rose 51.7 per cent.

Regional Western Australia and Perth both saw the the most significant sales volumes changes around the country, with increases of 78.7 per cent and 62.1 per cent respectively.

Regional and capital markets in Tasmania saw the lowest sales volume changes, increasing 11.7 per cent and 6.3 per cent respectively.

sales volumes
Source: CoreLogic

Rent values and yields

National rent values have risen 7.5 per cent in the year to July, which is the fastest annual increase since December 2008.

Rental rates in regional markets have spiked 11.9 per cent over the past year to July 2021, while capital markets saw a 5.9 per cent increase.

Source: CoreLogic

The Northern Territory was the only regional market to see a decline in rental rates, dropping 1.2 per cent. However, Darwin saw a staggering 21.8 per cent increase in rental rates during the same period.

Melbourne was the only capital market to see a decline, dropping 0.4 per cent.

Despite rapid growth in rent values, growth in purchase values has been higher. This meant gross rental yields have generally continued to decline.

Nationally, gross rent yields was 3.4 per cent across all dwellings. Combined regional markets show a growth rental yield of 4.5 per cent, while combined capitals was 3.1 per cent.

Source: CoreLogic

Median days on market

In the three months to July, Australian properties took an average of 29 days to sell. Days on market have seemingly crept slightly higher since April, but remain well below the decade average.

Combined regional markets saw an average of 33 days, while combined capitals saw an average of 28 days. This is a significant difference to the same time last year, which showed 65 and 44 days respectively.

Adelaide had an average of 16 fewer days on the market, while the rest of South Australia showed a huge improvement of 57 days.

Similarly, Darwin improved by an impressive 38 days, while the rest of the NT saw a change of 32 fewer days to the same timeframe last year.

While Sydney only saw a 16 day improvement, the rest of NSW had an average of 39 fewer days on market compared to 2020.

Source: CoreLogic

New listings and advertised stock

New listings have trended lower through July. CoreLogic suggested this was largely due to lockdown conditions in Sydney, with volumes added to the market at a rate of 2.6 per cent below the five-year average.

Total stock advertised is 27.1 per cent below the five-year average nationally. A decline in new listings and strong sales volumes have led to a depletion in total stock levels.

Melbourne was the one exception to the lower stock levels, with an improvement of 2 per cent compared to last year.

Source: CoreLogic

Other findings

  • For the four weeks ending 1 August, the average clearance rate across the capital cities was resilient at 74.4 per cent. However, auction volumes have tapered through lockdowns.
  • New house approvals have been trending lower since a peak in April 2021, but remain 27.5 per cent higher than the decade average.
  • Through June, the combined value of lending for the purchase of housing fell 1.6 per cent. This marks the first decline in housing finance since October 2020, and was led by a fall in first home buyer finance. 
  • First home buyers are comprising a smaller portion of market demand across every state, due to affordability constraints and fewer first time buyer incentives available.

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