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National Market Update: Q1 2024

The national quarterly growth rate has picked up pace, increasing from 1.4% in the fourth quarter of the previous year to 1.6% in the first quarter of 2024.

Despite housing values escalating more rapidly compared to the year's end, the growth trajectory has slowed by half since mid-last year, when home values were surging by 3.3% each quarter.

Factors such as rate hikes, rising living costs, and worsening housing affordability have collectively contributed to softer housing conditions since mid-last year. Nonetheless, the persistent undersupply of housing relative to demand continues to exert upward pressure on home values, notwithstanding these challenges.

The diversity in housing value trends can be attributed to notable variations in factors like housing affordability, demand-side pressures fueled by population growth, and inadequacies in housing supply. Notably, despite experiencing rapid capital gains, Perth's housing values remain comparatively affordable compared to larger capital cities. The shortage of housing persists, and purchasing demand remains robust, propelled by interstate and overseas migration rates well above average.

In the combined capital cities, lower quartile home values surged by 3.1% in the first quarter, in contrast to a more modest 0.7% increase in the upper quartile of the market. This pattern of stronger conditions in the lower-value sector was consistent across major capitals.

As housing affordability worsens and borrowing capacity decreases compared to a year ago, demand is increasingly skewed towards properties in the middle-to-lower value range.

Regional housing markets are also experiencing value increases, with similar levels of diversity observed as in capital cities. Notably, regional Victoria stands out with the softest growth conditions, experiencing a 0.3% decline in values in the first quarter, making it the only broad 'rest of state' region to record a decline in values year-to-date.

The volume of home sales in the first quarter of the year is estimated to be 9.5% higher compared to the same period last year, albeit from a relatively low base as the housing market had hit bottom from the downturn at the beginning of last year. Compared to the average of the previous decade for the same period, dwelling sales are estimated to be 3.7% higher.

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