Differing growth rates explained by low supply: CoreLogic

CoreLogic’s latest Home Value Index (HVI) for May 2024 has revealed the 16th consecutive rise in the index of 0.8 per cent, marking the largest monthly growth since October 2023.

The report found that the midsized capitals continued to lead the charge in price growth, with Perth ahead of all other states and territories at a growth rate of 2 per cent during the month.

This was followed by Adelaide recording growth of 1.8 per cent and Brisbane at 1.4 per cent.

The remaining capitals returned mixed readings with declines in Hobart and Darwin of 0.5 per cent and 0.3 per cent (respectively) and mild growth in Sydney (0.6 per cent), Canberra (0.5 per cent), and Melbourne (0.1 per cent).

CoreLogic research director Tim Lawless said that the best explanation for the difference in growth rates is the “extremely low levels of available supply across the strongest markets”.

“The number of properties available for sale in Perth and Adelaide remain more than -40 per cent below the five-year average for this time of the year while Brisbane listings are -34 per cent below average,” Lawless said.

“Inventory levels in these markets remain well below average despite vendor activity lifting relative to this time last year. Fresh listings are being absorbed rapidly by market demand, keeping stock levels low and upwards pressure on prices.”

Meanwhile, PropTrack’s Home Price Index grew by 0.3 per cent nationally, leaving prices now 6.68 per cent above the same levels seen a year ago (May 2023) and 9.58 per cent above the December 2022 lows.

Similarly to Lawless, PropTrack’s senior economist Eleanor Creagh attributed the growth in May to severe supply shortages across the country.

“Despite a rise in the number of homes for sale this year, strong population growth, tight rental markets, and home equity gains continue to bolster strong demand,” Creagh said.

“Meanwhile, building activity remains challenged by capacity constraints and higher costs, with consequent tight housing supply pushing prices and rents higher.”

Creagh further noted that the supply strain was having the effect of working against high interest rates that would normally cool price growth.

“This mismatch between supply and demand is continuing to offset the higher interest rate environment,” Creagh said.

“Further, current interest rate stability has sustained buyer and seller confidence, while ongoing home price rises are likely incentivising many to overcome affordability challenges and transact with the expectation of further growth.”

Prices are likely set to remain on an upward trajectory despite demand beginning to ease, Creagh has forecast.

“Despite some easing in the rate of population growth and more stock on market, home prices are expected to lift further in the months ahead,” she said.

“Although, it is likely the pace of growth will continue slowing through the seasonally quieter winter period, particularly with interest rate cut expectations pushed out to late-2025.”

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Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.