Spring has brought a subtle shift in Australia’s property market, with national home values edging up 0.4% in September 2024, according to CoreLogic’s Housing Value Index. While the numbers point to overall market strength, prospective first-home buyers might feel caught between opportunity and affordability.

For homeowners, the news continues to be relatively positive. Nationally, dwelling values increased by 1.0% over the quarter, though the growth is losing steam. The September quarter recorded the smallest national rise since March 2023, and some cities even saw declines. Melbourne led the pack with a 1.1% drop, followed by Canberra, Hobart, and Darwin. Sydney, too, saw a marginal 0.5% increase – its slowest growth since early 2023.

Mid-sized capitals like Perth, Adelaide, and Brisbane, which had driven the upswing earlier, also started to cool. However, their figures remain strong. Perth home values grew 4.7%, while Adelaide and Brisbane recorded increases of 4.0% and 2.7% respectively. Regional Australia also followed suit, with quarterly growth slowing to 1.0%.

First-Time Buyers: Caught in the Middle?

For those attempting to get a foot on the property ladder, this mix of modest growth and market cooling may sound like a good opportunity. Affordability however remains a significant hurdle, as reduced borrowing capacity and tight supply continue to plague the lower end of the market. Over the past 12 months, dwelling values in the lower quartile have surged by 12.4%, far outpacing the upper quartile, which saw a mere 3.8% rise. Simply put, the least expensive homes are becoming harder to buy, despite overall market moderation.

Sydney’s median home price now sits at $1.18 million, while Melbourne’s sits at $777,390, placing further pressure on first-time buyers in those capitals. Even in Brisbane and Perth, where prices are traditionally more accessible, median values are pushing $880,000 and $797,000 respectively.

Listings Are Up, but So Are Selling Times

One factor that could offer buyers a bit of hope is the increase in housing stock. Spring has brought a seasonal influx of new listings, now 3.2% higher than this time last year and nearly 9% above the five-year average. More listings mean more choice, but the selling conditions aren’t as easy for vendors. Homes are now taking an average of 32 days to sell, up from 27 days a year ago, and auction clearance rates have dropped to just over 60%.

This shift means buyers may have more negotiating power, particularly in markets with rising stock levels. But with national housing affordability at record lows, and the typical mortgage now requiring over half a median household’s income, it’s clear that purchasing a home is still a financial mountain to climb.

Looking Ahead: Affordability Remains the Key Concern

While the prospect of an interest rate cut on the horizon could boost borrowing capacity, housing values would need to fall significantly – or wages to rise – before affordability returns to more balanced levels. For now, first-time buyers will need to navigate a challenging mix of rising prices, tighter budgets, and increased competition for affordable homes.

Monthly change in capital city home values