Cotality's national Home Value Index recorded a third straight month of growth in April, with dwelling values up 0.3% to a new record high. The rise in values has added approximately $2,720 to the median value of an Australian dwelling over the month.
A lift in home values was recorded across every capital city, ranging from a 1.1% gain in Darwin, to a 0.2% rise in Sydney and Melbourne.
While in positive territory, the pace of growth in national values eased a little from March (+0.4%), with sentiment and auction clearance rates slumping throughout the month.
With the Federal Election now behind us, I would not be surprised to see the rate of growth pick up across Australia.
While Melbourne dwelling values lost 2.2% over the previous 12 months – the largest fall of any capital city in Australia (and almost the only capital city that recorded a fall) – investors may be wise to look for opportunities in that market.
A lot of investors abandoned this market in recent years but with depressed prices compared to other major cities, a large economy and a low unemployment rate, there is a lot to like about Melbourne as an investment market.
During my career, we have had an oversupply of property at many stages. However, over the last decade and a half, green, black and red tape has made it very difficult to increase the supply of new homes.
These issues combined with increased labour and material costs are meaning that many property developments are often more expensive to complete while taking longer to complete.
These challenges are represented in recent building activity data to December that showed dwelling commencements were down - 4.4% over the December 2024 quarter, holding -16.5% below the decade average.
Housing affordability remains dire in Australia. However, should the returning Federal Government follow through with its promises to allow all first home buyers to buy homes with a 5% deposit and to help build over 100,000 new homes only for first home buyers, housing affordability may improve for this group over time.
Despite those policies and taking a macro view on the residential property market, there is still likely a shortfall of hundreds of thousands of homes in Australia due to population growth and a lack of supply.
This situation could worsen before it gets better.
Australia benefits from being a safe and secure country that is a long way away from the rest of the world. Australia is a very attractive place to live and invest. I believe these attributes may have become even more pronounced during the global pandemic and in light of recent geopolitical issues and conflicts.
So long as Australia remains an attractive place to live, work and invest, it's difficult to make the case that the country won't have a strong property market moving forward.