Australian housing values moved through a fourth month of recovery with CoreLogic’s national Home Value Index (HVI) rising 1.1% in June, decelerating slightly from the 1.2% gain recorded in May.
Since finding a floor in February, the national measure of housing values has gained 3.4%, however, the market remains -6.0% below peak levels recorded in April 2022. That is the equivalent of the median dwelling value still being -$45,771 below a peak of $768,777.
Every capital city except Hobart (-0.3%) saw dwelling values rise in June, with CoreLogic’s research director, Tim Lawless, noting that Sydney continues to lead the cycle.
“Sydney home values increased another 1.7% in June, taking the cumulative recovery since the January trough to 6.7%. In dollar terms, Sydney’s median housing values are rising by roughly $4,262 a week,” he said.
A lack of available supply continues to be the main factor keeping upwards pressure on housing values, Mr Lawless said. “Through June, the flow of new capital city listings was nearly -10% below the previous five-year average and total inventory levels are more than a quarter below average. Simultaneously, our June quarter estimate of capital city sales has increased to be 2.1% above the previous five-year average.”
Although housing values continue to record a broad-based upswing, the pace of growth across most capitals eased in June. “A slowdown in the pace of capital gains could be a reflection of a change in sentiment as interest rate expectations revise higher,” Mr Lawless said. “Higher interest rates and lower sentiment will likely weigh on the number of active home buyers, helping to rebalance the disconnect between demand and supply.”
Regional housing values have also trended higher, albeit at a slower pace relative to the capitals. The combined regionals index also recorded a fourth consecutive month of growth, taking housing values 1.2% higher than the recent low in February.
Mr Lawless notes the softer growth trend across regional areas of the country align with recent shifts in demographic factors.
“After regional population growth boomed through the worst of the pandemic, internal migration trends have normalised over the past year, resulting in less housing demand across regional markets. Additionally, housing demand from overseas migration is skewed towards the capital cities rather than the regions.”
Regional Victoria is the only rest of state market where quarterly housing value trends remain negative, down -0.4% in June to be -1.3% lower over the quarter.
“Value declines were evident across most the SA4 sub-regions of regional Victoria, including the areas adjacent to Melbourne. In June, Geelong home values were down -0.7%, Ballarat values fell -0.3% and Bendigo was down -0.9%,” Mr Lawless said.
“The weaker conditions across regional parts of the state may be related to a normalisation in migration flows as more regional residents move to the city, along with a substantial narrowing of the affordability gap between regional Victoria and Melbourne through the recent upswing.”
Despite the recent uptick, most regions continue to see housing values below their recent cyclical highs. Hobart housing values have recorded the largest cumulative decline, holding -12.9% below the record high in May last year. Across the capital cities, Perth is the only capital where home values are at record highs, having recovered from the relatively mild -0.9% decline through the downturn. Adelaide home values are only -0.3% below record highs and likely to reach a new high point in July.
Across the regional markets, Regional NSW is recording the largest drop from peak through to the end of June, with values down -9.6%, followed by Regional Victoria (-8.4%) and Regional Tasmania (-7.2%). At the other end of the spectrum, dwelling values in Regional South Australia and Regional Western Australia, where housing market conditions have mostly remained positive through the rate hiking cycle to-date, recorded new cyclical highs in June.
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