Australia’s housing market gained further traction in June, with national home values rising 0.6% month-on-month, according to Cotality’s latest figures.
The increase marked the fifth consecutive monthly gain, building on the recovery that began in February following a 0.3% decline between November and January.
“The first rate cut in February was a clear turning point for housing value trends,” said Tim Lawless (pictured), Cotality’s research director. “An additional cut in May, and growing certainty of more cuts later in the year have further fuelled positive housing sentiment, pushing values higher.”
June’s monthly growth was broad-based, with every major region apart from Hobart (-0.2%) recording a rise in values. Over the June quarter, national home values rose 1.4%, up from 0.9% in Q1.
The combined capital cities outperformed regional markets in monthly growth for the second consecutive month, despite regional Australia still leading on a quarterly basis (1.6% vs 1.4%).
“Although value rises have been broad-based, the pace of growth remains mild compared to mid-2023… and for that matter, positively tepid relative to the extreme 8.1% quarterly peak growth recorded through the height of the pandemic,” Lawless said.
Darwin was the standout performer in Q2, with dwelling values up 4.9%. The city’s 1.5% rise in June pushed home values to a new record high, finally surpassing the previous peak set during the 2014 mining boom.
Elsewhere, Perth recorded 2.1% quarterly growth, while Brisbane rose 2.0%. Over the past five years, Perth and Brisbane have led the nation with gains of 81.1% and 75.1%, respectively, since June 2020.
Matthew Hassan, Westpac’s head of Australian macro-forecasting, said recent gains confirm a durable recovery.
“The June price, turnover and auction data all show signs that interest rate cuts are starting to generate a clearer upturn,” Hassan said. “The next few months should see another rate cut boost but will give us a sense of how well this momentum is being maintained in the face of still stretched affordability.”
According to Westpac, Cotality’s combined capital city index rose 0.6% in June for the third month in a row. Hassan noted the lift was “a little more convincing”, with strength broadening across segments and turnover picking up.
“Convergence remains a key theme with prices showing more similar gains across capital cities, dwelling types and price tiers,” Hassan said.
Sydney home values rose 0.6%, while Melbourne recorded a 0.5% increase in June. Melbourne’s annual growth is still slightly negative at -0.4%, though Hassan noted it’s likely to stabilise next month, Cotality figures showed.
He also pointed to early signs of strength in auction markets: “Preliminary estimates point to clearance rates rising well above 70% in the last week of the month. Sustained clearance rates above 70% have been associated with price growth of over 8% per year in the past.”
While the market is recovering, analysts warned that stretched affordability will likely moderate future gains.
“Given the upside risk that housing values will accelerate further from here as interest rates reduce, the reality is we will likely see home values rise by more than this over the coming 12 months,” Lawless said. “However, despite the prospect for lower interest rates, affordability constraints will likely temper the extent of a housing market upswing.”
Despite rising prices, the current rebound is occurring against a backdrop of relatively low turnover and tight supply. Housing turnover is tracking at an annualised rate of 4.9%, slightly below the 5.1%-decade average.
“Although demonstrated demand is tracking slightly below average, advertised supply is scarce, creating a more balanced market for buyers and sellers,” Lawless said.
Advertised listings for the four weeks to June 29 were 5.8% lower than a year ago and 16.7% below the five-year average. Auction clearance rates also firmed, hovering in the mid-60% range by month-end.
For more information about the July HVI, download the Cotality report and read the Westpac commentary.
