National home values record largest rise in 18 months

Following months of decline categorising the back end of 2022 and the start of 2023, Australian home values have recorded their strongest monthly growth since November 2021, according to CoreLogic.

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The research firm’s Home Value Index (HVI) for May found national house prices jumped 1.2 per cent during the fifth month of the year, highlighting a further acceleration of Australia’s housing market recovery. This performance marks the third consecutive month the HVI has risen.

Leading the recovery charge is the NSW capital, Sydney, where prices lifted 1.8 per cent during May, the city’s highest monthly gain since September 2021. After passing through its market trough in January, home values in the harbour city have risen 4.8 per cent, the equivalent of a $48,390 price lift.

Home value increases exceeding 1 per cent weren’t exclusive to Sydney, with Brisbane (1.4 per cent) and Perth (1.3 per cent) joining the club, while values also ticked upwards in Melbourne (0.9 per cent), Adelaide (0.9 per cent), Hobart (0.5 per cent), Darwin (0.4 per cent) and Canberra (0.4 per cent).

CoreLogic research director Tim Lawless explained lifting national home values coincides with consistently dwindling stock levels, with advertised listings trending lower throughout May.

“Inventory levels are 15.3 per cent lower than they were at the same time last year and 24.4 per cent below the previous five-year average for this time of year,” he said.

More broadly speaking, he revealed the “last time Australian capital city stock levels were this low, at this time of the year, was in 2007. This was also a period of rapid overseas migration and rising housing values.”

Such short supply of stock has increased competition among buyers, with Mr Lawless outlining that “there’s an element of FOMO creeping into the market”.

In line with increased competition within the market, national auction clearance rates have surged into winter, having held at 70 per cent or above for the past three weeks.

On the private treaty sales front, Mr Lawless noted, “homes are selling faster and with less vendor discounting”.

Home value growth hasn’t been isolated in Australia’s metropolitan pockets, with the nation’s regional markets recording a combined HVI increase of 0.5 per cent during May, following rises in both March and April.

Values climbed highest in regional parts of South Australia (0.9 per cent), Queensland (0.8 per cent), Tasmania (0.7 per cent), Western Australia (0.5 per cent), and NSW (0.5 per cent), while they went the opposite direction in regional Victoria, dropping 0.5 per cent throughout the month.

While these rises may spell positive news for regional Australian investors, Mr Lawless warned that capital city HVI increases have occurred at more than triple the pace of regional Australia.

Despite regional advertised housing supply remaining tight, Mr Lawless revealed the growth disparity is being driven by reduced net overseas migration into Australia’s regions.

“Australian Bureau of Statistics (ABS) data points to around 15 per cent of Australia’s net overseas migration being centred in the regions each year,” he said.

“Additionally, a slowdown in internal migration rates across the regions has helped to ease the demand-side pressures on housing.”

As for the specific market sector leading the nation’s recovery charge, home values across Sydney’s premium housing market have climbed 5.6 per cent over the last three months, double the 2.6 per cent growth reported across the more affordable market sectors.

Despite this, Mr Lawless explained, “buyers targeting the premium sector of the market are still buying at well below peak price”, as dwelling values across Sydney’s upper quartile concluded May 11.8 per cent below their January 2022 peak.

Mr Lawless concluded that the “disconnect between available supply and housing demand is a central factor placing renewed upwards pressure on housing values”.

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