Housing values continued to rise in February, with a perceptible acceleration in pace, new data shows.
CoreLogic’s national Home Value Index was up 0.6% in February, the strongest monthly gain since October last year. Values lifted Australia-wide, except in Hobart where the market fell 0.3%.
“Housing values have been more than resilient in the face of high-interest rates and cost of living pressures”, CoreLogic’s research director Tim Lawless said.
“The ongoing rise in values reflects a persistent imbalance between supply and demand which varies in magnitude across our cities and regions.”
Perth continues to stand out with a substantially higher rate of growth compared with any other region, to be up 1.8% over the month. Adelaide (up 1.1%), Brisbane (0.9%) and the regional areas of South Australia (1.1%), WA and Queensland (both 1.0%) also show a consistently high rate of capital growth month-to-month.
“These regions are generally benefiting from a combination of comparatively lower prices and positive demographic factors that continue to support demand”, Lawless noted.
Although growth rates in Sydney and Melbourne home values have levelled out, the monthly trend has accelerated, with Melbourne emerging from a three-month slump of negative monthly movements to record a subtle 0.1% rise in February. Similarly, Sydney dwelling values have moved back into positive territory over the past two months after recording a subtle decline in November and December.
“Potentially we are seeing some early signs of a boost to housing confidence as inflation eases and expectations for a rate cut, or cuts, later this year firm up”, Lawless said.
The re-acceleration in value growth has been accompanied by a bounce back in auction clearance rates, which averaged in the high 60% range through February. Consumer sentiment also recorded a solid rise in February, signalling a lift in confidence.
“Auction results and sentiment have both shown a historically strong relationship with housing trends”, Lawless said.
“The rise in clearance rates from the mid-50% range late last year to the high 60% range in February points to a better fit between buyer and seller pricing expectations.
“A rise in sentiment suggests households will have a better ability to make decisions around large financial commitments, like a property purchase.”
Although the pace of gains has shown some uplift, most regions are still recording value growth well below the highs of last year when the national index rose 1.3% in May.
“Last years’ rate hikes clearly dented capital gains, but higher interest rates haven’t been enough to extinguish growth entirely”, Lawless said, adding that the shortfall of housing supply relative to demand is continuing to place upwards pressure on home values across most regions.
He concluded, however, that it is hard to see a significant rebound in values shaping up, with affordability constraints, rising unemployment, a slowdown in the rate of household savings and a cautious lending environment likely to keep a lid on growth over the near term.
