Five Key Charts that explain the current Australian property market…

by | Jun 20, 2024 | property

Dear Fellow Property Investor, The Australian housing market has weathered significant challenges over the past five years, showing remarkable resilience despite a global pandemic, multiple interest rate hikes, and high inflation. The latest data sheds light on the current state of the property market and offers insights into its trajectory for the remainder of 2024.

1. Total value of residential dwellings

The total value of residential dwellings in Australia surged by $209.4 billion this quarter, reaching $10.7 trillion. This represents a 2% quarterly increase and a 9% year-on-year rise. National home values have rebounded from the 2022/23 downturn caused by interest rate pressures, reaching new record highs. Total Value of dwelling stock

PropTrack’s Home Price Index indicates a 6.68% annual increase in home values, with capital cities leading the growth.

Households own $10.29 trillion of the total residential value.

The average price of residential dwellings climbed by $14,300, hitting $959,300 this quarter.

2. Increase in residential dwellings

The number of residential dwellings rose by 52,700, totalling 11,176,100 this quarter.

This 0.5% increase during the March quarter equates to one property per 2.4 people.

Australian suburb

Over the past year, more than 170,000 homes were added to the inventory, matching the new homes built within that period.

However, to meet the Government’s pledge of 250,000 new homes annually, 240,000 new dwellings are needed each year. The current figure falls short by 80,000.

3. Decline in new building approvals

New building approvals dropped by 0.3% month-on-month but grew by 3.5% compared to last year.

Before January 2020, the average number of completed properties per 12-month period exceeded 200,000.

Since then, this average has fallen to around 170,000 due to an 11% decrease in approvals over the 12-month rolling period, according to April data.

Graph private dwelling approvals

Private sector house approvals fell by 1.6% in April but increased by 9% year-on-year, while apartment approvals declined by 1.1% month-on-month and 8.5% from last year.

With new apartment construction contributing the largest volume of new properties, approval rates for this type of new build need to rise.

4. Demand for new tradies

There is an immediate need for 90,000 new tradies, with an additional half a million required over the next five years to meet the target of 1.2 million new homes by 2029.

This data, from Build Skills Australia, highlights the urgency of this demand to support the housing construction industry.

Tradies working

Jobs and Skills Australia notes a shortage of tradespeople in all occupations except roof tilers in Victoria.

This skilled labour shortage, coupled with soaring construction material prices, is hampering the construction of new homes.

5. Rise in new housing loans

New lending for total housing increased by 4.8% in April to $29.4 billion, following a 3.8% rise in March.

This figure is 24.6% higher than a year ago.

April saw an uptick in both the value and number of new loan commitments, with owner-occupier loans rising by 6% month-on-month and 24% year-on-year.

Graph new loan commitments

For investors, the monthly change was 7%, and 44% compared to April last year.

Year-on-year, there was a 19% increase in owner-occupier new loan commitments and a 25% rise for investors.

This suggests growing buyer confidence and a positive outlook for rental property availability as investors return to the market in greater numbers.

What these figures tell us…

These five key metrics provide a snapshot of the Australian property market’s current status and its potential future direction.

The market’s resilience amid economic challenges, the steady increase in property values, the rising number of residential dwellings, the pressing demand for skilled labour, and the surge in new housing loans shows that although the market is continuing to grow there are headwinds that are hampering this growth.

As we move through 2024, these trends will likely continue, although ideally an increase in new approvals and a resolution to the skills shortage is needed to speed up the number of new properties being built.

Let me ask you something…

Do you have a game plan for 2024?

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which, in my opinion, already bottomed out in November 2022), again?

Or, will you join them?

So, what are you waiting for?

Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!

Click HERE to reserve your seat now!