Australian property market update - September 2019

As we move into October, it's time to look back at September for our monthly property market update.  

If you recall with our August property market update, the overall trend was some positive momentum - with values up across five of the eight capital cities. The recovery then was largely driven by a resurgence in Melbourne and Sydney, with other markets still lagging.

This is largely still the case for September's real estate market update, so let's take a closer look at how this has continued - starting with national property values.

National property values: September 2019

property market news

Houses
$537,004
Monthly change: +0.9%
Units
$492,929
Monthly change: +0.9%

Property analysts CoreLogic detail that national property values posted, "the largest monthly gain since March 2017, largely driven by a strong rebound in Sydney and Melbourne where values were up 1.7% over the quarter and +0.9% for the month". 

CoreLogic Head of Research Tim Lawless highlights the distinct economic and demographic conditions that exist in the major urban centres to explain their strong performance, with high population growth, comparatively low unemployment and job growth behind the demand for housing there. He also thinks investors are active again in these markets.

"This is the third consecutive month of gains since the market bottomed out in May 2019"

Dwelling value rise of 1.7%

This is the third consecutive month of gains, which has given national dwelling values a cumulative rise of 1.7% since the market bottomed out in May 2019. Not all capitals are in the black though, with Hobart (-0.4%) Perth (-0.8%) and Darwin (-0.2%) all negative over the month, though many areas are seeing a reduction in the rate of decline. 

Combined regional areas are up +0.1% overall for the month, though regional SA (-0.5%) and WA (-1.3%) are still struggling. Median dwelling values nationally currently stand at $524,744.

Rental yields are generally still higher relative to a year ago across most areas, though trending lower in Sydney, the city with the lowest rental yields (3.2%), with Melbourne only slightly more positive (3.5%), while Darwin is the standout of the capitals at 6.0%.

Read: Tracking the 2019 Spring selling season: How is it doing so far?

Market update: Sydney and regional NSW

Houses
$900,017
Monthly change: +1.9%
Units
$710,559
Monthly change: +1.1%

Sydney buyers have been active in September, which has helped to lift the market +1.7%, and +3.5% up for the quarter. This still leaves it down -4.8% for the year to date, for a median property price of $805,424. Investors appear to be shunning off-the-plan developments, and looking for more secure opportunities including older established apartments and long time favourites like the Eastern suburbs

Dig into the data on a capital city sub-region and it is obvious that some areas are still struggling, with the Inner South West down -9.2% for the quarter.

The same is true for many regional NSW regions, with previous headliners Newcastle (-6.6%), Shoalhaven (-6.8%) and the Illawarra (-8.3%) all in retreat over the same timeframe. The Riverina is the standout regional market in NSW, up +4.5% for the quarter.

Market update: Melbourne and regional VIC

Houses
$729,052
Monthly change: +1.9%
Units
$546,203
Monthly change: +1.4%

Like Sydney, Melbourne experienced solid sales activity in September, with values up +1.7%, for a respectable rise of +3.4% for the quarter. Houses (+1.9%) are currently outperforming units (+1.4%) in Melbourne. Even though the overall trend is positive, it still leaves the market here down -3.9% for the year to date, for a median dwelling value of $634,913. 

Look at house and unit prices and you can see why homeowners, investors and international migrants are more likely to favor the Victorian capital over Sydney. At the end of the day they can get substantially more for their money. 

Regionally the Mornington Peninsula is still feeling the pain of the downturn, down -8.8% for the quarter, and overall regional VIC is negative -1.0% over the past year.

Read: Melbourne property market forecast 2020

Market update: Brisbane and regional QLD

Houses
$540,224
Monthly change: +0.2%
Units
$377,447
Monthly change: -0.2%

Gains in Brisbane are marginal for September (+0.1%), and up +0.5% for the quarter - though the city has not experienced the same slump as many other capitals. This means it is only down -2.1% for the year to date for a median value dwelling of $492,474. 

Units appear to be recovering after a long period underperforming due to oversupply in some postcodes and could now be due for a patch of price growth. 

The Gold Coast (+1.0%), Sunshine Coast (+0.9%) and Richmond Tweed (+0.4%) are all in positive territory for the quarter, though further afield in regional Queensland, Outback areas are still heavily in the red -34.5%, as are many other agricultural communities across the country.

Read more: Brisbane property market forecast 2020

Market update: Hobart and regional TAS

Houses
$489,662
Monthly change: -0.5%
Units
$379,780
Monthly change: +0.1%

Hobart's run as the property investors port of call looks to be over, as it starts to absorb the reality of the downturn. It is down -0.4% over September but is still positive at +0.4% over the quarter, though this is very likely to turn red in the months ahead. 

Analysts believe there is not enough activity in the local economy to sustain the market, with few major infrastructure projects or job creation prospects on the horizon. 

The median property value in Hobart is $459,271, with houses at $489,662 and units $379,780. If you bought a property in Hobart five years ago you would still be +38.2% up - the best return of any capital. Regional Tasmania is still in positive territory at +3.9% year to date, with the South East region up +3.6%.

Market update: Canberra and the ACT

Houses
$672,203
Monthly change: +1.0%
Units
$424,911
Monthly change: +0.6%

The numbers for Canberra look good, especially when you put them up against the other capitals. It is up +1.0% for the month, +1.4% for the quarter and +1.3% for the year to date, for a median dwelling value of $604,039.

Consistent demand is the key here, as educational institutions and government continues to be a major employer in the nation's capital.

Read more: National Australian property market forecast 2020

Market update: Adelaide and regional SA

Houses
$462,177
Monthly change: -0.1%
Units
$323,599
Monthly change: 0%

Adelaide is the most affordable of the state capital cities with a median dwelling value of $428,292. Property prices have been flat over the month 0%, down over the quarter -0.6% and negative -1.1% over the year to date. 

Prospects for long term economic growth are the major concern for Adelaide, as manufacturing jobs move overseas or cease to exist in the city. Adelaide North (+1.2%) is the standout urban growth area, while the Outback (-4.6%) is still in the red.

Market update: Perth and regional WA

Houses
$452,580
Monthly change: -0.9%
Units
$348,594
Monthly change: -0.2%

Perth and WA in general are still suffering from a weak economic climate, which has been exacerbated by a tight credit environment. Perth slipped -0.8% over September, and -1.9% for the quarter. This makes Perth the weakest performing capital city for the three months to September 2019. 

Some of its suburbs are also the weakest capital city sub-regions, with Perth - Inner down -10.6% over the last quarter. Overall this totals a loss of -9.0% for the year to date for a median property value of $436,008, with houses racking up bigger losses than units. 

Regional WA farming areas continue to slump, with the Outback down -21.3% and the Wheatbelt -15.8% over the quarter.

Market update: Darwin and regional NT

Houses
$464,825
Monthly change: -0.6%
Units
$293,047
Monthly change: +0.4%

Darwin is a challenging market to invest in, given the lack of economic demand drivers and most analysts warning investors to avoid it for the foreseeable future. It is down -0.2% for the month, negative -1.1% for the quarter and in the red -9.5% for the year to date. 

There are some green shoots in Outback NT, up +2.0% over the last quarter, however this is very localised and is likely to be short lived.

What does all this mean and what can we expect?

Overall there is cause for some guarded optimism for the Australian property market as some postcodes begin to show signs of a more sustained turnaround. When you dig into the data, positive metrics, such as clearance rates, must be analysed with eyes wide open, as housing stock for sale is still lower than last year.

Properties are also taking longer to sell and vendors are discounting their rates more than they were this time last year. These conditions mean you have to be even more diligent with your research, as only certain areas have multiple long-term growth drivers, such as jobs and population growth or major investments in infrastructure in the pipeline.

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