Home Values Edge Upwards but Recovery Slows

Housing values have risen again, edging up 0.7 per cent in July for the fifth straight month of recovery.

According to CoreLogic, the national Home Value Index, since finding a floor in February, is up 4.1 per cent, following a 9.1 per cent decline from record highs in April, 2022.

Nationally, home values remain 5.3 per cent below the April 2022 peak, with only Perth, Adelaide and Regional South Australia recording a new cyclical high in home values through July.

While housing values are continuing to record a broad-based rise, the rate of growth has lost momentum over the past two months, slowing from 1.2 per cent in May.

CoreLogic research director Tim Lawless said the most substantial reduction in growth had occurred in Sydney.

“After leading the upswing, the monthly pace of growth in Sydney housing values has halved from a recent high of 1.8 per cent in May to 0.9 per cent in July,” he said.

“Sydney has also had a significant rise in the number of fresh listings added to the market, 9.9 per cent higher than the same time last year and 18.0 per cent above the previous five-year average.

“An increased flow of new listings provides more choice and may be working to reduce some of the urgency felt among prospective buyers.”

The monthly pace of growth accelerated in Brisbane and Adelaide in July, leading the pace of gains across the capitals with housing values up 1.4 per cent across both cities.

Although the trend in new listings has risen in these cities, Lawless said the number remained well below levels from a year ago and the previous five-year average.

Canberra was the only capital city to record a decline in values in July, down 0.1 per cent, while Hobart values were unchanged.

The slowdown in value growth has mostly been driven by an easing in gains across the upper quartile of the market.

While growth in the upper quartile of the combined capitals index diminished from 1.8 per cent in May to 0.7 per cent in July, the lower quartile (1 per cent) and broad middle of the market (0.9 per cent) remained resilient in July, after a smaller but more consistent rate of growth during previous months.

“Some resilience in growth across the middle and more affordable end of the market aligns with housing finance data which has shown a stronger bounce back in the value of lending to first home buyers and investors during recent months,” Lawless said.

“These segments tend to be more active across the middle to lower end of the pricing range where competition to purchase a home may be more intense.

“Premium housing markets tend to lead the cycles, so the slowdown in the pace of growth could be a sign of a broader easing in the pace of growth over the coming months.”

Regional values continued to lag behind the capitals with the combined regionals index rising 0.2 per cent in July compared to a 0.8 per cent increase across the combined capitals index.

Every rest-of-state region recorded a smaller change in home values through July relative to the capital city, reflecting milder housing demand across regional Australia as demographic patterns normalise.

The largest rise in regional housing values during the three months ending July (based on SA4 regions) has been the Gold Coast (4 per cent), the South East region of Tasmania (3.1 per cent), and the Newcastle/Lake Macquarie region (3 per cent).

On the flipside, the weakest conditions over the rolling quarter were confined to areas of Regional Victoria, with Bendigo (-3.7 per cent) recording the largest decline, followed by Shepparton (-2.3 per cent) and the Warrnambool/South-West region (-2.3 per cent).

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▲ West End in Brisbane: The River City recorded a record high for home prices.

Home prices continue rise

Meanwhile, home prices have continued to climb, with July marking the seventh consecutive month of national home price growth, according to the
PropTrack Home Price Index.

The report found that national home prices jumped 0.16 per cent in July to sit 1.36 per cent above July 2022 levels, returning to positive annual growth.

All capitals aside from Darwin and Canberra recorded a monthly increase, with home prices in Brisbane hitting a record high after rising 0.37 per cent in July.

Prices across the capital cities are now up 1.88 per cent annually and are 28.1 per cent above March 2020 levels.

Of the capital cities, price increases were led by Adelaide (+0.62%), Brisbane (+0.37 per cent) and Perth (+0.36 per cent), all of which hit fresh price peaks in July.

Sydney (+0.28 per cent), Melbourne (+0.01 per cent) and Hobart (+0.21 per cent) also had increases, while Canberra (-0.02 per cent) and Darwin (-0.08 per cent) were the only capitals to decline.

Adelaide and Perth have continued to record the strongest annual growth, up 5.27 per cent and 5.69 per cent respectively from their levels a year ago.

Regional areas have continued to experience comparatively softer price growth throughout 2023, up down 0.03 per cent in July to be 0.08 per cent higher year on year.

That said, regional markets have still recorded a smaller decline from peak levels, given prices held up better for much of 2022, according to PropTrack.

Article source: Queensland Property Investor