CoreLogic head of research Tim Lawless said, “Our national dwelling value index may have found a floor in July, with dwelling values holding firm over the month following a consistent trend towards smaller month-on-month declines through the first half of the year. Since peaking, the national index is down 8.3%.”
“The stabilisation in housing values is becoming more broadly based, with five of the eight capital cities recording a subtle rise in values over the month, while the regional areas of South Australia, Tasmania and Northern Territory also recorded a lift in housing values in July.”
According to Mr Lawless, a number of factors are supporting the turnaround in housing conditions, however lower mortgage rates, improved access to credit, a boost in housing market confidence post the federal election and recent tax cuts are likely the primary drivers. Other factors include improvements in housing affordability and a reduction in advertised supply levels. “All of which is creating a stronger selling position for vendors,” says Mr Lawless.
The improved housing market conditions have lifted the annual rate of change to -6.4% nationally, with the annual rate of decline across the combined capitals index easing from a recent low of -8.4% to -7.3%, while the combined regional markets are recording an annual rate of decline of -3.0%.
The primary drivers for the turnaround in housing market performance were Australia’s two largest cities, Sydney and Melbourne, where values have ticked higher over the past two months, taking values 0.3% off their floor in Sydney and 0.4% higher in Melbourne. The 0.2% lift in Brisbane values was the first month-on-month rise since November last year.
Mr Lawless said, “Despite an unprecedented amount of new apartment stock entering the market, Sydney and Melbourne unit values have consistently outperformed the detached housing sector through the downturn, and this trend is continuing into the recovery phase.”
Sydney house values remain -0.2% lower over the past three months, while unit values have shown a slight rise (+0.02%). In Melbourne, house values were down -0.3% over the most recent three month period while unit values are 1.1% higher.
The stronger performance across the unit sector may be attributable to ongoing affordability challenges in Sydney and Melbourne which, according to Mr Lawless, could be driving demand towards the medium to high density sector. He said, “Values for higher density dwellings are generally lower, however we may see some dampening of unit values in coming months across those precincts where supply is elevated as the large number of high-rise off-the-plan apartment sales moves into the re-sale market.”