CoreLogic’s national Home Value Index (HVI) increased 0.7% in March, a subtle rise on the 0.6% uptick recorded in February, primarily driven by stronger conditions in regional Australia, offsetting a slip in values across Sydney and Melbourne.
Australian dwelling values were up by 2.4% in the first quarter of the year, adding approximately $17,000 to the value of an Australian dwelling. Values were rising at more than double the current pace a year ago, up 5.8% over the three months to March 2021 before the quarterly rate of growth peaked at 7% over the three months ending May 2021.
Sydney’s housing market has seen the most significant slowdown in growth rate, falling from a peak of 9.3% in the three months to May 2021, to 0.3% in the first quarter of 2022. Melbourne’s growth rate, meanwhile, fell from 5.8% in April last year to just 0.1% over the past three months.
Tim Lawless, CoreLogic’s research director, said despite the increase in the monthly growth rate among cities and regions, mounting evidence showed housing growth rates were losing momentum.
“Virtually every capital city and major rest of state region has moved through a peak in the trend rate of growth some time last year or earlier this year,” Lawless said. “The sharpest slowdown has been in Sydney, where housing prices are the most unaffordable, advertised supply is trending higher and sales activity is down over the year. There are a few exceptions to the slowdown, with regional South Australia recording a new cyclical high over the March quarter and some momentum is returning to the Perth market where the rate of growth is once again trending higher since WA reopened its borders.”
Amidst the softening market conditions, the national growth rate was 18.2% – the first time it has fallen below the 20% mark since August last year, after reaching a cyclical high of 22.4% in January 2021.
Lawless said there would be a sharp fall in the annual growth trend in the coming months, as the strong gains recorded in early 2021 would be dropped out of the 12-month calculation.
National housing turnover was also easing, with preliminary transactions estimated for the March quarter tracking 14.3% lower than the same period in 2021, but still up 12.2% compared to the previous five-year average.
“Nationally, the volume of housing sales is coming off record highs but there is some diversity across the capital cities in these figures as well,” Lawless said. “Our estimate of sales activity through the March quarter is 39% lower than a year ago in Sydney and 27% lower in Melbourne, while stronger markets like Brisbane and Adelaide have recorded a rise in sales over the same period.”
Regional Australia has continued to show some resilience to a slowdown, with housing values across the combined regional areas rising at more than three times the pace of the combined capital cities through the March quarter. Regional dwelling values rose 5.1% in the three months to March, compared with the 1.5% increase recorded across the combined capital cities. The rolling quarterly growth rate in regional dwelling values has consistently held above the 5% mark since February 2021, CoreLogic data showed.
Helping explain the strong housing conditions outside of the capitals was the Australian Bureau of Statistics (ABS) regional population growth figures for FY2020-21, which showed an increase of nearly 71,000 residents living in regional areas of Australia, while those living in the capitals fell by approximately 26,000.
