Analyzing Australia’s Varied Housing Market Dynamics

In a comprehensive analysis of the Australian housing market, Eliza Owen of CoreLogic delves into the complexities that define the current landscape. Her article, “What drives Australia’s multi-speed housing markets?” published recently, outlines the varying performance across different regions, highlighting the disparities that have emerged since the onset of the COVID-19 pandemic.

According to Owen, Australian home values have surged by 35.6% since March 2020, demonstrating robust growth through the pandemic. This growth, however, has not been uniform, with certain cities like Perth, Brisbane, and Adelaide experiencing significant demand, while others such as Melbourne and Hobart lag behind. “The highest-performing markets have generally come off a low base, with housing conditions and demographic trends relatively weak over the years preceding the pandemic,” Owen explains.

The disparity in housing market performance can be attributed to various factors, including migration trends, supply and demand balances, and regional economic conditions. Owen points out, “Differences in capital growth trends are marked by the varied supply/demand balances of each city, and in turn, migration, affordability factors and dwelling completions influence that supply and demand dynamic.”

One key metric highlighted in the article is the ‘sales to new listings ratio,’ which Owen uses to illustrate market conditions across the capitals. She notes, “Stronger market performers like Adelaide, Brisbane, Perth, and Sydney have a sales-to-new listings ratio greater than 1, indicating robust selling conditions.”

However, the article also signals potential shifts on the horizon. Owen cautions, “Annual growth has also started to slow in recent months across the combined capital cities, as ongoing high interest rate settings, weakening economic conditions, and affordability constraints gradually weigh on the pace of home value increases.”

The article also sheds light on the varying impacts of interstate migration flows and the levels of overseas migration, which have played a significant role in shaping local demand. “Net interstate migration plunged to deep losses through 2021 and 2022 in NSW and VIC, while QLD attracted a lot of the outflow from the southern states,” Owen observes, illustrating the dynamics that affect regional housing markets.

In summary, Owen’s article provides a detailed look into the multi-speed nature of Australia’s housing markets, driven by a complex interplay of regional differences, economic factors, and demographic shifts. As the market continues to evolve, these factors will likely continue to influence the trajectory of home values across the nation.

References:

https://propertyupdate.com.au/what-drives-australias-multi-speed-housing-markets/