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Value growth easing

Housing values continue to rise, albeit more slowly each month, new data shows.

CoreLogic’s national Home Value Index posted a 0.6% gain in February, the 17th consecutive monthly increase.

While housing values are generally rising, the pace of growth has trended downwards since April last year. February’s reading marks the lowest monthly change since October 2020 and is down from 1.1% in January and the most recent peak of 2.8% in March 2021.

All capital cities and regions are now recording a slowing trend in value growth, albeit with significant diversity.

Sydney and Melbourne have shown the sharpest slowdown, with Sydney (down 0.1%) posting the first decline in housing values since September 2020. Melbourne values were unchanged over the month, following similar results in December (down 0.1%) and January (up 0.2%)

According to CoreLogic’s director of research Tim Lawless, conditions are easing less noticeably across the smaller capitals, especially Brisbane, Adelaide and Hobart, where values rose by more than 1% in February.

“Similarly, regional markets have been somewhat insulated to slowing growth conditions, with five of the six rest-of-state regions continuing to record monthly gains in excess of 1.2%”, Lawless said.

Stronger market conditions were reported in Brisbane and Adelaide over summer, with Brisbane housing values rising 7.2% in the three months to February, while Adelaide is up 6.4% during the same period. At the other end of the spectrum, Melbourne values are just 0.2% higher over the past three months while Sydney values have risen by 0.8%.

With the trend in housing values losing pace over the past 11 months, the annual growth trend turned in February. Nationally, home values were 20.6% higher over the past 12 months, down from what is likely to be the peak rate of annual growth recorded at 22.4% last month.

Regional Australia continues to record a substantially higher rate of growth than the capital cities. Over the past three months, housing values across the combined rest-of–state regions increased at more than three times the speed of housing values across the combined capital cities; 5.7% and 1.8% respectively.

Advertised inventory levels help explain the divergence in housing growth trends, Lawless suggested.

“Nationally, the total number of properties advertised for sale over the four weeks ending 27 February was 13.3% lower than the same period a year ago, demonstrating an ongoing shortage of available housing to purchase, at least at the macro-level”, he said.

While some cities, such as Melbourne and Sydney, have seen advertised stock return to more normal levels, other Australian capitals continue to record extremely low inventory.

Lawless said more choice translates to less urgency for buyers and some empowerment at the negotiation table.

“The cities where housing values are rising more rapidly continue to show a clear lack of available properties to purchase. Total listings across Brisbane and Adelaide remain more than 20% lower than a year ago and more than 40% below the previous five-year average.

“Similarly, the combined rest-of-state markets continue to see low advertised supply, 24.9% below last year and almost 45% below the five-year average,” he added.

The pace of rental growth has shown a subtle rebound over the past two months, which can partially be attributed to the seasonal strength in rental markets through the first quarter of the year. Nationally, CoreLogic’s rental value index was up 0.8% in February, holding firm from January (0.8%) and up from the 0.6% growth recorded in December.

The Home Value Index is free for download on the Corelogic website.

About Adam Nobel

Principal
M. Bus, Grad Dip Adv, B.Int Bus, LREA

adam@hugoalexander.com.au

0417 007 001

Adam is the founder and Principal of Hugo Alexander Property Group. With a previous career in advertising, 20 years experience in property investment, and 14 years in Brisbane real estate, he knows the market inside out to ensure his clients grow their wealth faster.

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