The housing market continued to bounce back for the eighth month running, with CoreLogic’s national home value index recording a 0.8% rise in September, following a 0.7% lift in August.
National home values increased 2.2% in the September quarter, easing from a 3% gain in the second quarter. This reflected a slowdown as advertised stock levels increased, helping to take some heat out of the market.
Adelaide recorded the highest capital gain in the September quarter at 4.3%, followed by Brisbane at 3.9% and Perth at 3.6%, while Hobart saw the biggest decline in values over the quarter with a -0.2% drop, taking the southern capital to a new cyclical low.
“The three capitals recording the highest capital gain each have advertised supply levels that are around 40% below their previous five-year average,” said Tim Lawless (pictured above), CoreLogic’s research director. “Advertised supply levels across Hobart, where values are still trending lower, have been holding at above-average levels since June last year and were almost 40% above its five-year average.”
Since bottoming out in January, the national index has picked up by 6.6%, but home values were still down 1.3% compared to the record highs seen in April 2022.
Lawless expected that at the current growth rate, the national HVI would recover to a new nominal high by the end of November.
“We have already seen dwelling values reach new record highs in Perth and Adelaide,” he said. “Brisbane looks set to reach a new record high in October, with home values currently only 0.6% below their previous peak. Hobart and Canberra have the furthest to go before staging a nominal recovery, with dwelling values remaining 12.4% and 7.0% below their cyclical highs from last year.”
The slowdown in the pace of growth was led by the upper quartile of the capital housing city market. The premium housing market might be losing some steam now, though, with the quarterly rate of growth across upper quartile dwellings slipping to 2.3% while the lower quartile growth rate was up to 3.2%.
“This shift is partly attributable to the lower value capitals such as Perth and Adelaide recording a faster rate of growth, however even in these cities it is the lower quartile that has outperformed,” Lawless said.
In the more expensive cities of Sydney and Melbourne, the broad middle of the market is now experiencing the highest growth rate after previously being led by the upper quartile.
“Possibly we are starting to see renewed affordability challenges deflecting more demand towards the middle of the market where barriers to entry are lower,” Lawless said.
The capitals continued to outpace the regional markets, with the combined capital city market recording a 2.5% increase in dwelling values, more than half of the combined regional markets’ 1.1% increase and with every “rest of state” region posting weaker growth conditions relative to their capital city counterpart over the third quarter.
“Softer housing conditions across regional Australia looks to be more demand-driven, with the estimated number of home sales 6.5% lower than a year ago and 9.2% lower relative to the previous five-year average,” Lawless said. “In contrast, the estimated volume of home sales across the combined capital cities was 1.9% higher than a year ago and 6.3% above the five-year average.”
Most regional markets were also seeing relatively low advertised supply levels, which was putting some upward pressure on values. Victoria and regional Tasmania were the exceptions, however, with both markets having above-average advertised supply and housing values that trended lower over the quarter.
Housing values are significantly influenced by the trend in advertised stock levels. Since early June, the flow of new listings has been increasing, bucking the normal seasonal trend, where new listings were typically flat to falling through winter. Over the four weeks ending Sept. 24, the flow of new capital listings was up 14% compared to the same period last year and 8% higher than the previous five-year average.
Along with the increase in the number of freshly advertised properties, the total number of homes advertised for sale has also been on an upswing. Total capital city listings recorded a 6.7% increase in the rolling four-week count from the low point in early July. However, total listings were still down compared to last year and were less than the five-year average.
“More listings imply more choice for buyers, and more choice means less urgency, more time to deliberate on the purchase and negotiate with the vendor,” Lawless said.
The total listing trend remained a mixed bag. Hobart, Canberra, and Melbourne had above-average numbers of homes on the market. On the other end of the spectrum was Perth, where total advertised supply was 43.8% below the previous five-year average for this time of the year.
The increase in the advertised stock levels was due to a combination of more fresh listings, plus a slower rate of absorption as the estimated number of homes sold through the quarter dropped. Although modelled estimates for capital city sales through the September quarter were up 6.3% compared to the previous five-year average, they were 5.7% lower than that of the June quarter.
Lawless said a range of factors could have led to less purchasing activity.
“Housing affordability is still relatively stretched and is getting worse as home values continue to rise,” he said. “High interest rates make it harder to qualify for credit, especially when considered alongside high cost of living pressures and the three-percentage-point serviceability buffer. Persistently low consumer sentiment is another factor dampening housing sector activity.”
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