Australia’s housing value rebound continued into 2020 with the CoreLogic national home value index up by 0.9% over the first month of the year. This now takes the annual growth rate to 4.1%; the fastest pace of growth for a twelve month period since December 2017.
Housing values rose in January across every capital city and rest-of-state region, apart from regional South Australia, where values held firm over the month. According to CoreLogic head of research Tim Lawless, this demonstrates a broader recovery trend which originally began in Sydney and Melbourne midway through 2019, and gradually spread to other areas of the country.
Across the capital cities, Sydney and Melbourne continued as the leaders for capital gains after recording more substantial declines during the recent downturn. Values increased by 1.1% and 1.2% over the month respectively, while Hobart (+0.9%) achieved a higher growth rate relative to most other regions. The remaining capital cities generally saw a mild rise in values over the month.
For Perth home owners, the latest results deliver positive news. Housing values are slowly emerging from a slump lasting five-and-a-half years, as dwelling values edged 0.1% higher over the month. Perth dwelling values posted their first rise over a rolling quarter (+0.4%) since a brief period of growth in May 2018. Darwin, where dwelling values have been consistently falling to be almost 32% below their 2014 peak, also recorded a subtle rise (+0.1%) in January.
Across the regional markets, the strongest conditions were recorded in regional Tasmania, where values were up 1.3% over the month, followed by regional Western Australia (+0.9%) then regional Victoria and regional Queensland, both up 0.8%
Although there is an apparent recovery across every GCCSA (Greater Capital City Statistical Area) of Australia, the speed of growth has lost some momentum over recent months. The national dwelling index slowed from a recent monthly peak of 1.7% in November, to 0.9% in January.
Tim Lawless said, “Seasonal effects provide some explanation for the slowdown. The CoreLogic seasonally adjusted hedonic index implies the time of year shaves about 1 basis point of growth from the December reading and 2 basis points from the January reading.
“Factoring in the seasonal affect, the latest results indicate a reduction in the speed of growth across most markets, especially for Sydney and Melbourne where affordability constraints are once again becoming more pressing. As advertised stock levels rise over the early part of the year, we could see some further dampening of growth rates.”
Nationally, housing values recovered 6.7% since finding a floor in June last year, however CoreLogic’s national index remains 2.2% below the October 2017 peak.
Tim Lawless said, “With housing values rising at the quarterly pace of 3.7%, we are likely to see a nominal recovery in the national home value measure within the next two-to-three months.”
Four of Australia’s eight capital cities are already showing home values at new record highs: Brisbane, Adelaide, Hobart and Canberra. Sydney values need to recover a further 5.4% before posting a full nominal recovery and Melbourne values need to see a further 1.2% lift. Perth and Darwin will take a much longer time to see values recover. Although the Perth market seems to be moving into a recovery, housing values remain 21.3% below their 2014 peak and Darwin values are 31.8% below their peak.