Australian housing values experienced a fourth consecutive month of growth, with CoreLogic’s national Home Value Index (HVI) rising 1.1% in June, slightly below the 1.2% increase in May. Since hitting a low point in February, the national measure for housing values has increased by 3.4%, although the market remains 6.0% below its peak, equivalent to the median dwelling value being $45,771 lower than its high of $768,777.
In June, all capital cities except Hobart (-0.3%) saw dwelling values increase, with Sydney leading the way. Research director of CoreLogic, Tim Lawless, shared that Sydney’s home values rose by another 1.7% in June, bringing the total recovery since January to 6.7%. In dollar terms, this equates to Sydney’s median housing values rising by around $4,262 per week.
A primary factor keeping the upward pressure on housing values was a lack of available supply. New capital city listings were nearly 10% below the previous five-year average in June, with total inventory levels more than a quarter below average. At the same time, CoreLogic’s June quarter estimate of capital city sales increased to be 2.1% above the previous five-year average.
Although housing values continued to experience a broad-based upswing, the rate of growth across most capitals slowed down in June. Lawless suggested that this could be due to a change in sentiment as interest rate expectations revised higher. Higher interest rates and lower sentiment may impact the number of active home buyers, eventually helping to rebalance the demand and supply disparity.
Regional housing values have also risen, albeit at a slower pace relative to capital cities. The combined regionals index recorded a fourth consecutive month of growth, taking housing values 1.2% higher than their nadir in February. Lawless explained that this softer growth trend across regional areas could be linked to recent shifts in demographic factors. As regional population growth soared during the pandemic, internal migration trends have now normalized over the past year, leading to decreased housing demand across regional markets. Additionally, housing demand arising from overseas migration tends to be skewed toward capital cities rather than regions.
An exception to this trend is regional Victoria, the only “rest of state” market where quarterly housing value trends remained negative, dropping 0.4% in June and 1.3% lower over the quarter. Lawless pointed out that weaker conditions across regional parts of Victoria may be connected to the normalization of migration flows, as more residents moved to the city. This movement, coupled with a narrowing affordability gap between regional Victoria and Melbourne during the recent upswing, contributed to the decline in value.
Despite the uptick, most regions continue to see housing values below their recent cyclical highs. Hobart, for example, experienced the largest cumulative decline, with housing values remaining 12.9% below the record high in May of last year. Among the capital cities, Perth is the only one where home values are at record highs, having recovered from the relatively mild 0.9% decline throughout the downturn. Meanwhile, Adelaide’s home values are only 0.3% below record highs, with a possibility of reaching a new high point in July.
Regional markets exhibited varied performance, with regional NSW experiencing the largest drop in values from their peak through to the end of June (-9.6%). This was followed by regional Victoria (-8.4%) and regional Tasmania (-7.2%). In contrast, dwelling values in regional South Australia and regional Western Australia reached new cyclical highs in June, as housing market conditions in these areas have remained mostly positive throughout the rate-hiking cycle thus far.
