The latest CoreLogic Home Value Index offers a nuanced picture for rental property owners in Australia, detailing a landscape marked by regional divergence and shifting growth dynamics as of July 2024.

Despite a modest national increase of 0.5% in home values, the details reveal a complex market environment that savvy landlords should navigate strategically.

Across the board, Australian home values have marked their 18th consecutive month of growth, with a notable 13.5% rebound from a significant dip earlier in the year. However, this headline figure masks underlying variations that are critical for landlords to understand. Particularly, Melbourne, Hobart, and Darwin have seen a retreat in property values over the past three months, with declines of 0.9%, 0.8%, and 0.3%, respectively. This contrasts sharply with robust gains in cities like Perth and Adelaide, where quarterly growth rates of 6.2% and 5.0% respectively underscore stronger local demand and tighter supply conditions.

Tim Lawless, CoreLogic’s research director, points out that supply levels significantly influence these varied outcomes. Cities experiencing declines, such as Melbourne and Hobart, are grappling with an influx of listings above average levels, whereas markets on the upswing like Brisbane, Adelaide, and Perth are seeing listings more than 30% below average. This scarcity is a boon for landlords in these cities, potentially sustaining higher rental yields and lower vacancy rates.

Moreover, the shift towards more affordable housing options is reshaping rental markets. Lower quartile home values, representing the more accessible segment of the market, have risen nationally by 3.3% over the past quarter, compared to a mere 0.8% increase at the upper quartile. This trend is driven by an erosion in borrowing capacity and tightening affordability, skewing demand towards less expensive properties. Rental property owners might consider this shift when planning their investment focus, particularly in capital cities where affordability pressures are intensifying.

This is good news for local investors in the Albury Wodonga region, which offers an attractive market accessibility compared to the capital cities and promised long term growth. A notable investment opportunity lies in Thurgoona, NSW. This suburb boasts a strong average rental yield of 5.0%, which outperforms the national growth yields of Brisbane at 3.7%, Adelaide at 3.8%, and Perth at 4.3%. Despite a slight settling in local sale prices over the last quarter, the Southern NSW region's promising long-term upward growth potential further solidifies its standing as a prime investment destination.

While the overall growth in home values presents a positive outlook, the real story for rental property owners lies in the details. Understanding regional variations, supply dynamics, and shifting renter preferences is key to making informed, strategic decisions that balance growth potential with risk management in today’s volatile property market.