Home values turned positive again in February, new data shows.
CoreLogic’s national Home Value Index posted a 0.3% rise in February, breaking the short and shallow downturn that lasted just three months and dragged the national measure of home values lower.
The February rise was subtle, but broad based, with every capital and ‘rest-of-state’ region except Darwin (down by just 0.1%) and Regional Victoria (flat) recording a monthly rise in values.
Melbourne and Hobart led monthly gains (both up 0.4%), with the largest changes across the capitals being recorded there, where home values have previously been among the weakest. For Melbourne, the lift breaks a streak of ten consecutive months of falling home values.
Sydney, Adelaide and Perth (up 0.3%) followed, with Brisbane and Canberra close behind on 0.2%.
The return to growth across Sydney and Melbourne is being driven by the more expensive end of the market, with upper quartile house values leading the monthly gains in both cities after high-value markets recorded the sharpest declines. This stronger performance is in line with earlier research from CoreLogic, which highlighted that premium housing markets in Sydney and Melbourne have historically been the most sensitive to rate cuts.
CoreLogic’s research director Tim Lawless believes the improved housing conditions have more to do with improved sentiment than any immediate improvement in borrowing capacity.
“Expectations of lower interest rates, which solidified in February, look to be flowing through to improved buyer sentiment”, he said.
“Along with the modest rise in values, we have also seen an improvement in auction clearance rates, which have risen back to around long-run average levels across the major auction markets.”
Regional housing conditions continued to show a stronger growth trend relative to the capital city counterparts in February, with combined values rising 0.4% over the month.
However, there has been some diversity in these trends, with the monthly change favouring Sydney, Melbourne and Hobart over their regional counterparts.
Improved market conditions may also be supported by a slowdown in the flow of freshly advertised ‘for sale’ listings. Counts of new listings coming to market across the combined capitals were tracking 4.7% lower than a year ago over the four weeks to February 23, and 1.5% below the previous five-year average.
“Although total advertised supply levels are almost 1% higher than a year ago, listings remain 7.9% below the previous five-year average and the reduced flow of fresh stock to market could be supporting some upward pressure on prices, especially if buyers are becoming more active amid higher sentiment and lower rates”, Lawless concluded.
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