Australian housing values rose by 0.6% in June, marking a fifth straight month of growth following the -0.3% dip seen between November and January.
Monthly gains were recorded across almost every broad region of Australia, with Hobart (-0.2%), the only capital city or rest-of-state region to see a month-on-month fall.
The June quarter saw national home values rise by 1.4%, following a 0.9% lift through the first quarter of the year and a -0.1% decline in Q4 last year. Except for Regional Tasmania (-0.4%), every capital city and rest-of-state region recorded a rise in values through the quarter.
Cotality’s research director, Tim Lawless, says falling interest rates have been a clear catalyst behind the renewed momentum.
“The first rate cut in February was a clear turning point for housing value trends. An additional cut in May, and growing certainty of more cuts later in the year have further fuelled positive housing sentiment, pushing values higher.”
“Although value rises have been broad-based, the pace of growth remains mild compared to mid-2023 when the quarterly rate of growth in national home values peaked at 3.3%, and for that matter, positively tepid relative to the extreme 8.1% quarterly peak growth recorded through the height of the pandemic.”
However, the current housing rebound is occurring against a backdrop of relatively low home sales. Housing turnover through the first half of the year, based on estimates of sales and total dwelling stock, is tracking at an annualised pace of 4.9%, slightly below the decade-average turnover of 5.1%.
From a supply perspective, advertised stock levels are also low, tracking -5.8% below the same time a year ago (based on data for the four weeks ending June 29th) and -16.7% below the previous five-year average.
“Although demonstrated demand is tracking slightly below average, advertised supply is scarce, creating a more balanced market for buyers and sellers.”
“Improved selling conditions can be seen in auction clearance rates, which have risen to slightly above the decade average in the last two weeks of June, holding around the mid 60% range.”
Underneath the headline results, the combined capital cities have posted a stronger monthly growth outcome relative to the combined regional areas of Australia for a second consecutive month, following a period of outperformance across regional Australia.
Although the quarterly pace of growth still favours regional Australia, at 1.6%, compared with the combined capitals at 1.4%, it is looking increasingly likely that the quarterly growth trend will once again favour capital city markets over the coming months.
Across the individual capitals, quarterly growth was led by Darwin, with dwelling values jumping 4.9%. Darwin’s 1.5% rise through June was enough to take dwelling values to a new record high, finally surpassing the mining boom peak recorded just over eleven years ago in May 2014.
Outside of Darwin, the quarterly trend across the capitals was led by Perth (+2.1%) and Brisbane (+2.0%), the same markets which have led the five-year growth trend, with values up 81.1% and 75.1% respectively since June 2020.
At 3.4%, the financial year change in national home values looks to be moving through a low point, but, given the re-acceleration in growth trends over the past five months, is likely to gradually rise through the second half of the year.
Annualising quarterly change implies a national annual growth rate of 5.8%, which is slightly above the decade average annual rate of 5.2%.
“Given the upside risk that housing values will accelerate further from here as interest rates reduce, the reality is we will likely see home values rise by more than this over the coming 12 months,” said Mr Lawless.
“However, despite the prospect for lower interest rates, affordability constraints will likely temper the extent of a housing market upswing.”
CoreLogic Australia