The housing values in Australia trended 1.0% higher in December which has further slowed from a 1.3% rise in November; showing a continuation of the softening trend in market growth rate from a cyclical high of 2.8% back in March 2021.

The growth in value within Brisbane and Adelaide along with regional Queensland have continued reaching a new cyclical high in December. This is on the back of the reduced affordability challenge in the larger capital cities in addition to the improved support for housing demand in Queensland. There is also a reduced supply in these markets.

Sydney and Melbourne on the other hand, have both recording their softest monthly reading since October 2020. This is off the back of an uplift in freshly advertised listings in December. Affordability issues in these cities can also offer an explanation as to the slowing in growth as bigger deposits alongside, low income growth and weak demographic trends.

Looking at the Australian Regional housing values, there has been an upward trend recorded with a 2.2% for combined regional. Regional Queensland recorded an increase of 2.4%, which is the highest across all regional markets for the month. Though looking over the course of the year, both NSW and Tasmania were the strongest markets recording 29.8% and 29.5% respectively. Since March 2020, regional housing values have increased up 32.0% as opposed to the 20.0% lift in values seen across the combined capitals.

Regional values grew up 6.4% in the December quarter, which rose from the 5.1% rise in the previous quarter.

The regional markets which have seen the highest growth are the Southern Highlands and Shoalhaven recording a year-to-date rise of 37.7% followed by Queensland’s Sunshine Coast at 33.7%.

It is predicted that regional markets, especially those which provide certain lifestyle appeals, will continue to benefit from the increase in demand as remote working policies continue to be normalised and the demand for holiday homes remain strong amid the continued international border restrictions. However, it must be noted that as interest rates continue to rise, this will put affordability constraints onto these regional markets.

New listings put on to the Australian housing market throughout December was 21.4% above the five-year average. This is off the back of strong vendor confidence with quick selling times and high auction clearance rates. Looking further however, it must be noted that out of the markets, Melbourne was the only city to record listing levels above the five-year average, whilst Sydney were 3.9% below. Brisbane and Adelaide have recorded stock levels around 35% below the five-year average.

When it comes to dwelling rents, these increased by 9.4% over the year to 31 December 2021, which is the largest increase since the 12 months ending January 2008. Unit rents increased 7.5%, where house rents were up 10.1%.

Rental growth have increased further for the housing market as unit rentals have been affected by a lack of overseas migration and domestic preferences shifting away from higher density amid the affects of the pandemic. However, it must be noted that affordability is likely to drive tenants back towards the unit sector.

Yields have fallen to record lows across Australia reaching 3.2% in December. Sydney recorded the lowest yield at 2.4%, with Melbourne at 2.7%. This is off the back of the sharp increase in housing values when compared with the rental market.