Australian housing values moved through a fourth month of recovery in June, new data revealed this week.
CoreLogic’s national Home Value Index (HVI) rose 1.1% in June, decelerating slightly from the 1.2% gain recorded in May.
Since finding a floor in February, values have gained 3.4%, although the market remains 6.0% below peak levels recorded in April 2022. That is the equivalent of the median dwelling value still being $45,771 below a peak of $768,777.
Every capital city saw dwelling values rise in June except Hobart (which fell 0.3%), with CoreLogic’s research director Tim Lawless noting that Sydney continues to lead the cycle.
“Sydney home values increased another 1.7% in June, taking the cumulative recovery since the January trough to 6.7%”, Lawless observed, adding that Sydney’s median housing values are rising by roughly $4,262 a week.
A lack of available supply continues to be the main factor keeping upwards pressure on housing values.
“Through June, the flow of new capital city listings was nearly 10% below the previous five-year average and total inventory levels are more than a quarter below average”, Lawless said.
“Simultaneously, our June quarter estimate of capital city sales has increased to be 2.1% above the previous five-year average.”
Although housing values continue to record a broad-based upswing, the pace of growth eased in June.
“A slowdown in the pace of capital gains could be a reflection of a change in sentiment as interest rate expectations revise higher”, Lawless said.
“Higher interest rates and lower sentiment will likely weigh on the number of active home buyers, helping to rebalance the disconnect between demand and supply.”
Regional housing values have also trended higher, albeit at a slower pace relative to the capitals. The combined regionals index also recorded a fourth consecutive month of growth, taking housing values 1.2% higher than the recent low in February.
Lawless noted that the softer growth trend across regional areas of the country align with recent shifts in demographic factors.
“After regional population growth boomed through the worst of the pandemic, internal migration trends have normalised over the past year, resulting in less housing demand across regional markets”, he said.
“Additionally, housing demand from overseas migration is skewed towards the capital cities rather than the regions.”
Despite the recent uptick, most regions continue to see housing values below their recent cyclical highs. Hobart housing values have recorded the largest cumulative decline, holding -12.9% below the record high in May last year.
Across the capital cities, Perth is the only capital where home values are at record highs, having recovered from the relatively mild 0.9% decline through the downturn. Adelaide home values are only 0.3% below record highs and likely to reach a new high point in July.
