Capital city housing markets have outpaced regional markets in terms of overall price growth for the first time in over a year, according to the latest report from CoreLogic.
The median dwelling value across all capital cities increased by 2.8% in March, higher than that of combined regional markets at 2.5%.
Over the past year, Australians' dwelling preferences have changed as a result of the impacts of the COVID-19 pandemic on the economy and work conditions. This led to migration away from the capital cities, in turn causing strong price gains in regional markets.
"Housing values in regional areas are 11.4% higher over the past year, demonstrating the earlier stronger growth trend. Capital city values are now 4.8% higher on an annual basis with the acceleration in growth evident in March," said Tm Lawless, research director at CoreLogic.
Victoria was the only state where regional markets reported higher price gains than the state capital. Still, the gap is not that substantial, with regional Victorian markets reporting a 2.6% growth versus Melbourne's 2.4%.
Overall, March witnessed Melbourne and Sydney strike a full recovery from their respective downturns.
Sydney surpassed its last peak, recording values that are 2.6% higher than in July 2017. This is despite the 14.9% drop in values through to May 2019 and the further 2.9% fall throughout the COVID downturn. On a quarterly basis, dwelling values in Sydney grew by 6.7%.
"The last time Sydney housing values recorded a quarterly trend this strong was in June/July 2015. Following this brief surge, the pace of growth rapidly slowed as limits on investor lending kicked in to slow the market," Lawless said.
Melbourne followed a similar trend, recovering from the 11.1% decline between 2017 and 2019 and the 5.6% drop during the downturn. Dwelling values in Melbourne grew by 4.9% over the quarter.
With the strong showing in both capital and regional markets, national dwelling values have increased by 2.8%. This is the fastest prices have grown since October 1988, when they increased by 3.2%.
In terms of dwelling type, houses still posted a stronger price gain of 3% compared to units’ 1.9%. Across the combined capitals, the quarterly growth rate for houses (6.5%) is more than double that of units (3.1%).
“Despite the underperformance, unit markets have turned a corner, with Sydney recording two consecutive months of rising values, while the Melbourne unit market has seen values consistently rising since October last year, with the trend accelerating over recent months.”
The table from CoreLogic below shows the performance of each capital city market in March: