The housing market has made further progress towards a recovery, with CoreLogic’s national home value index recording the third consecutive month of gains, lifting the national value of housing by a cumulative 1.7% since the market found a floor in May 2019. The month-on-month lift of 0.9% in national housing values was the largest monthly gain since March 2017.
CoreLogic head of research Tim Lawless said, “Although housing values are now consistently tracking higher, at least at a macro-level, the national index remains 6.8% below the October 2017 peak, indicating that buyers still have some time to take advantage of improved housing affordability before values return to record highs.”
The September gains were once again driven by stronger conditions emanating from Sydney and Melbourne where dwelling values increased by 1.7% over the month; Australia’s two largest cities have seen a rapid bounce-back in home values over the past two months, with Sydney up a cumulative 3.3% and Melbourne up 3.2% in August and September. Housing values remain 11.9% below their July 2017 peak in Sydney and 7.9% below Melbourne’s November 2017 peak.
Brisbane (+0.1%) and Canberra (+1.0%) were the only other capital cities to record a rise in dwelling values over the month, while values held firm in Adelaide but fell in Hobart (-0.4%) and continued their long run of losses in Perth (-0.8%) and Darwin (-0.2%).
Most of the regional markets recorded a rise in September, with regional SA (-0.5%) and regional WA (-1.3%) the only ‘rest of state’ areas to record a drop in values.
Mr Lawless believes that the strong rebound in Sydney and Melbourne housing markets relative to other regions, can be attributed to a variety of factors. He said, “While all regions are benefitting from low mortgage rates and improved access to credit, economic and demographic conditions in New South Wales and Victoria continue to outperform most areas of the country. Population growth is higher, unemployment is lower and jobs growth is stronger, providing a solid platform for housing demand.”
Another factor cited by Mr Lawless as driving the strength in Sydney and Melbourne property markets could be higher levels of investor participation. The latest housing finance data from the ABS (to end of July) shows investors comprised 32% of mortgage demand across New South Wales and 26% of Victorian mortgage demand which is higher relative to any of the states or territories.
Mr Lawless said, “Although markets outside of Sydney and Melbourne aren’t showing the same recovery trend, most areas have either seen a reduction in the rate of decline or are seeing a modest trajectory of growth as low mortgage rates and a slight loosening in credit policy support buyer demand.”