Over the last five years, the Australian property market has faced many different challenges. From the sudden global pandemic to multiple interest rate hikes and soaring inflation, the market has encountered its fair share of obstacles. Nevertheless, it has demonstrated incredible resilience. Let’s take a closer look at the five key indicators released by Karen Dellow, a Senior Data Analyst at REA Group, that reveal the current state of the Melbourne property market and where it might be headed.

This quarter, the overall value of residential properties in Australia increased by $209.4 billion, reaching a grand total of $10.7 trillion. This vividly illustrates the market’s strength and ability to recover from the 2022/2023 downturn, reaching new records with a 9% increase compared to the same period last year. PropTrack’s Home Price Index shows a 6.68% annual increase, with capital cities like Melbourne and Sydney leading the charge. The average home price has climbed from $14,300 to $959,300 this quarter, and if you own a property, you are expected to see great opportunities from investors.

In just a few months, 52,700 new residential dwellings have been added, bringing the total to over 11 million. That’s roughly one property for every 2.4 people in Australia! Over the past year, 170,000 new homes have been built, indicating a growing supply to meet demand. However, this falls short of the government’s ambitious goal of 250,000 new homes annually, which is essential for keeping up with growing demand.

Building approvals give us insight into future housing supply, and the numbers are telling. New building approvals fell slightly by 0.3% month-on-month but grew by 3.5% compared to last year. Prior to January 2020, over 200,000 properties were being completed annually, on average. Since then, that average has dropped to around 170,000 due to an 11% decline in approvals. While house approvals are growing, new apartment builds are declining. If we want to see more housing, especially in our growing cities, we need to boost apartment approvals.

One major challenge Australia is facing is the shortage of tradespeople. Right now, we need 90,000 new tradespeople and half a million more over the next five years to hit the target of 1.2 million new homes by 2029. Build Skills Australia emphasises the crucial demand for this labour to support the housing construction industry. With nearly every trade in Victoria experiencing a shortage, combined with soaring construction material costs, building new homes is no easy job. The shortage of skilled labour is one challenge for the timely construction of new homes that needs addressing.

The number of new housing loans rose by 4.8% in April, reaching $29.4 billion, marking a significant 24.6% gain over the previous year despite facing challenges. The growth was seen across both loans for people buying homes and for investors, indicating renewed confidence in the market. Monthly increases in owner-occupier loans were 6%, while investment loans grew by 7%. This surge suggests that with growing confidence, more people are entering the housing market. Whether you’re a first-time homebuyer or looking to expand your investment portfolio, this development is great news for the market.

These five key numbers tell us that Australian real estate is not just surviving, it’s thriving. Property values are rising, more homes are being built, and mortgages are increasing. However, to maintain this momentum, challenges such as building approvals and the tradie shortage need to be overcome.

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Source: REA Group