Home value declines flatten – CoreLogic

This as lower advertised stock levels keep a floor under prices

Home value declines flatten – CoreLogic


By Mina Martin

Declines in Australian home values inched down through February, with CoreLogic’s Home Value Index (HVI) falling -0.14% over the month – the smallest monthly drop since May (-0.13%), when rate hikes started.

The national deceleration was driven primarily by a 0.3% lift in Sydney dwelling values, but the loss of downwards momentum was broad-based, with Darwin (-0.3%) the only capital city to post a steeper monthly fall in February, albeit from relatively flat conditions. All capital cities except Hobart (-1.4%) posted declines of less than -0.5% over the month.

Tim Lawless (pictured above), CoreLogic’s research director, said housing values stabilising over the month coincides with consistently low advertised supply levels and an increase in auction clearance rates.

“The past four weeks have seen the flow of new capital city listings tracking – 17.0% lower than a year ago and -11.9% below the previous five-year average,” Lawless said. “This trend towards a below-average flow of new listings has been evident since September last year, coinciding with a loss of momentum in the rate of value decline.”

February also saw auction clearance rates bounce back, with the capital city weighted average hitting the high 60% range through the second half of the month, while clearance rates in Sydney surpassed 70% in the week ending Feb. 19, the first time since February last year.

But it is still highly uncertain whether this improving trend can be sustained, as higher interest rates and lower sentiment continue to dent housing demand.

“Considering the RBA’s move to a more hawkish stance at the February board meeting, along with an expectation for a weaker economic performance and a loosening in labour markets, there is a good chance this reprieve in the housing downturn could be short-lived,” Lawless said. “We also have the fixed-rate cliff ahead of us; arguably the full impact of the aggressive rate hiking cycle is yet to play out.”

Across value segments, it was the upper quartile of the combined capital city housing market that drove this month’s stabilising trend, rising 0.1% in February. The lower-value segments continue to fall, but the declines also stabilised, down -0.1% across the lower quartile and -0.3% across the broad middle of the market.

This trend was most obvious across Sydney’s upper quartile, where values grew 0.7% over the month, compared with a -0.2% fall in values across the lower quartile of the Sydney market.

Leading the downturn were the upper quartile housing values, which fell -13.5% across the combined capital cities over the past 12 months, compared with a 1.7% rise in values across the lower quartile. A similar trend has been observed in previous cycles, where the upper quartile tends to lead both the upswing and the downturn.

CoreLogic data also showed a -0.3% drop in regional dwelling values in February and 0.1% decline across the combined capital cities. The weaker regional result relative to the combined capitals was mostly due, however, to the monthly rise in Sydney housing values, rather than a larger fall in regional market values. Each of the broad rest-of-state regions, except from NSW, delivered a monthly outcome that was inline or stronger relative to their capital city counterparts.

Since peaking in June, the combined regionals index dropped -7.7%, compared with a -9.7% decline in the combined capital cities index, which peaked a couple of months earlier. Regional housing values were still 30.7% above levels posted at the onset of COVID-19 in March 2020, while the combined capitals index sat 10.4% higher.

Dwelling values remained higher than they were at the onset of the pandemic across every capital city and broad rest-of-state region. Melbourne currently has the smallest value buffer, with housing values just 0.03% higher than March 2020 levels. This was followed by Sydney, where dwelling values remained 7.7% higher. At the other end of the spectrum was Regional SA, where housing values surged 47.6%, and Adelaide, where housing values jumped 41.4% through the upswing and have remained relatively resilient to value falls through the rate hiking cycle to date. CoreLogic reported.

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