February marked a turning point for the Australian real estate market as the national Home Value Index by CoreLogic climbed by 0.3%, halting a three-month downturn.
This upturn, although modest, was widespread, with nearly all regions except Darwin and Regional Victoria – which remained flat – experiencing a rise in property values.
Melbourne and Hobart emerged as leaders in this recovery, both registering a 0.4% increase in home values, the highest among the capitals.
This rise is particularly notable for Melbourne, which had seen home values decline for 10 consecutive months.
In contrast, cities like Brisbane, Perth, and Adelaide, which had previously led in growth, saw their momentum slow, with increases ranging from 0.2% to 0.3%, CoreLogic reported.
The shift in momentum favours the more affluent sectors of the market, particularly in Sydney and Melbourne, where upper quartile house values have surged ahead after being the most affected by previous declines.
According to Tim Lawless (pictured), CoreLogic’s research director, the resurgence in home values is less about direct enhancements in borrowing capacities and more about a shift in buyer sentiment, fueled by anticipations of reduced interest rates.
“Expectations of lower interest rates, which solidified in February, look to be flowing through to improved buyer sentiment," Lawless said.
Alongside the rise in home values, there was a noticeable improvement in auction clearance rates, returning to long-run average levels.
The property listing landscape also reflects these changes, with the number of new listings in the capitals dropping by 4.7% compared to the same period last year, and 1.5% below the five-year average.
Despite a slight year-over-year increase in total advertised supply levels, the market is still experiencing a 7.9% dip below the five-year average in fresh listings, which may be contributing to upward price pressures as buyer activity intensifies, CoreLogic reported.
The return to growth in the Australian housing market signals a robust start to the year, spearheaded by notable recoveries in Melbourne and Hobart.
With improved market sentiment and anticipation of rate cuts, the outlook for the coming months remains optimistic, particularly if the trend of reduced new listings continues, potentially sustaining the upward trajectory in home values.
For more information, read the CoreLogic article or download the report.
