Momentum in Australia’s housing market has been sustained through the second quarter. The CoreLogic Home Value Index rose 1.7% in May after a similar gain in April.

Price growth in Melbourne and Sydney, after a period of deceleration, picked up again in April and May, and signs of a recovery are evident in Brisbane and Perth. However, the markets in Adelaide and Darwin are sluggish and are expected to underperform. The Reserve Bank of Australia’s May interest rate cut will provide a small fillip to house value growth, as will a further cut in the cash rate that Moody’s Analytics expects to occur in the second half of 2016.

House values nationwide are expected to rise 6% this year and 4.1% in 2017. Much of this rise will be driven by continued gains in Sydney, where values are forecast to rise 7.3% this year, or about half the 14.9% rise in 2015. Meanwhile, Melbourne’s market is nearing a peak and could be entering a slump because of high incoming supply.

Activity in Australia’s housing market remains robust on a national basis, and Moody’s Analytics expects values nationwide to rise 6%
this year and 4.1% in 2017.

  • Momentum in Australia’s housing market has been sustained through the second quarter.
  • Sydney’s housing market is on a renewed upward trend, while Melbourne’s market is forecast to be close to a peak.
  • The rate of decline across Perth’s housing market is easing, and values are forecast to grow modestly in the third quarter of 2016.
  • Brisbane’s improving job market is lifting house values.
  • Slower income growth in Adelaide continues to weigh on house value growth. Falling rents in Darwin are similarly cooling the
    market there.