CoreLogic’s national Home Value Index (HVI) has increased by 0.6% in March – its first month-on-month rise since April 2022 – after remaining virtually flat the prior month (-0.1%).
Dwelling values were up across the four largest capital cities and most of the broad rest-of-state regions, with Sydney leading the increases with a 1.4% gain.
Tim Lawless (pictured above), CoreLogic’s research director, said the rise was driven by a combination of low advertised stock levels, extremely tight rental conditions, and additional demand from overseas migration.
“Although interest rates are high and there is an expectation the economy will slow through the year, it’s clear other factors are now placing upwards pressure on home prices,” Lawless said.
“Advertised supply has been below average since September last year, with capital city listing numbers ending March almost -20% below the previous five-year average. Purchasing activity has also fallen but not as much as available supply; capital city sales activity was estimated to be roughly -7% below the previous five-year average through the March quarter.
“With rental markets this tight, it’s likely we are seeing some spillover from renting into purchasing, although, with mortgage rates so high, not everyone who wants to buy will be able to qualify for a loan. Similarly, with net overseas migration at record levels and rising, there is a chance more permanent or long-term migrants who can afford to, will skip the rental phase and fast-track a home purchase simply because they can’t find rental accommodation.”
The increase in housing values has been most evident across the upper quartile of Sydney’s market, where house values rose 2% in March and where unit values were 1.4% higher over the month.
“Sydney upper quartile house values fell by -17.4% from their peak in January 2022 to a recent low in January 2023, the largest drop from the market peak of any capital city market segment,” Lawless said. “We may be seeing some opportunistic buyers coming back into the market where prices have fallen the most.”
Regional housing markets, too, have mostly experienced firmer housing conditions, with the combined regionals climbing 0.2% in March. Both regional WA and regional SA saw housing values remain at cyclical highs despite 10 rate hikes. SA’s Fleurieu-Kangaroo Island SA3 sub-region led capital gains over the month with a 2.6% lift in dwelling values. This was followed by Dubbo, NSW (2.5%), Wellington, Victoria (2.4%), and Mid West, WA (2.1%).
“The best-performing regional markets are quite different to what we were seeing through the recent growth cycle,” Lawless said. “In today’s market it is mainly rural areas that are seeing the strongest increases, rather than the commutable coastal and lifestyle markets that were booming through the upswing. However, we are seeing some subtle growth return to regions within commuting distance of the major capitals, after many recorded a sharp drop in values.”
Housing values aren’t rising everywhere though. In Hobart, home values fell -0.9% over the month – the largest drop among the capital cities. The southernmost capital saw housing values tumble -12.9% since peaking in May last year, overtaking Sydney as the largest cumulative fall from peak across the capital cities. However, the pace of decline across Hobart has been easing over the past three months.
Housing values also dropped in Canberra (-0.5%), Darwin (-0.4%), Adelaide (-0.1%), Regional Victoria (-0.1%), and Regional Tasmania (-0.7%), CoreLogic reported.
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