Housing values lifted again in April, as diminished supply continues to trump high interest rates and inflation.
Australian home values continued trending higher in April with CoreLogic’s national Home Value Index (HVI) rising 0.6%. This was on par with the pace of gains recorded in both February and March, with the monthly rise adding approximately $4,720 to the national median dwelling value.
April’s increase takes the current growth cycle into its 15th month, with housing values up 11.1% or approximately $78,000 since the trough in January last year.
Perth remains at the top of the growth charts with a 2.0% rise in April, followed by Adelaide at 1.3% and Brisbane at 0.9%.
The 0.4% rise in Sydney values has held reasonably firm through each of the past three months, while Melbourne’s market (down 0.1%) has broadly stabilised after recording a subtle 0.8% dip over the three months to January.
“We aren’t seeing any signs of heat coming out of the Perth housing market just yet, in fact the quarterly pace of growth, at 6.0%, is approaching the cyclical highs seen during the pandemic when interest rates were at rock bottom,” said Tim Lawless, CoreLogic’s research director.
“On the other hand, we are seeing the pace of gains slow across the Brisbane market, easing below the 1% mark to 0.9% in April for the first time in 12 months.
“Affordability pressures may be impacting the pace of growth across the city, following a nearly $300,000 increase in values since the onset of COVID in March 2020, the largest dollar value increase of any capital.”
Almost every capital city is recording stronger growth conditions across the lower value range of the market. Darwin, where housing affordability is less challenging, is the exception, while Sydney’s lower quartile and broad middle of the market are showing the same quarterly change at 1.7% compared with a 0.5% rise in upper quartile dwelling values.
“The shift towards stronger conditions across lower value markets can also be seen between the housing types, with growth in unit values outpacing house values over the past three months”, Lawless said.
“Hobart was the only city where houses recorded a larger gain than units over the past three months.”
Regional markets have shown a slightly stronger quarterly growth rate over the past five months than their capital city counterparts, following a 10-month period where the combined capitals index was outperforming.
According to Lawless, the persistent rise in housing values, despite an array of downside factors that would normally act to push prices lower, can be drawn back to the insufficient supply of housing relative to demand.
“There are a few ways to measure housing supply; one is to measure how many homes are available to purchase based on advertised listings”, he said.
“Over the four weeks ending April 28th, CoreLogic estimates there were 76,265 homes listed for sale across the combined capitals; 17.6% below the previous five-year average. At the same time, the number of residential sales in April was estimated to be 2.4% higher than the previous five-year average for this time of the year.
“Such a mismatch between available supply and demonstrated demand is keeping markets skewed in favour of sellers in most cities. Capital city homes are currently selling in a median of 27 days compared with the decade average of 30.7 days and most cities are recording lower than average levels of vendor discounting.
“Eventually housing demand and supply will converge, driven by slowing population growth and, at some stage, a ramp up in residential construction activity, Lawless said, adding that the mismatch between housing supply and demand doesn’t look like it will change in the near future.
