Foot Comes Off Pedal as Home Values Recovery Decelerates

Australian housing values have recorded a fourth month of recovery but the pace appears to be slackening.

According to CoreLogic’s national Home Value Index, values rose 1.1 per cent in June, decelerating slightly from the 1.2 per cent gain in May. 

Since finding a floor in February, the national measure of housing values has gained 3.4 per cent, however, the market remains 6 per cent below peak levels recorded in April 2022.

That is the equivalent of the median home value still being $45,771 below a peak of $768,777.

Every capital city except Hobart (-0.3 per cent) recorded values rise in June. CoreLogic research director Tim Lawless said that Sydney continued to lead the cycle.

“Sydney home values increased another 1.7 per cent in June, taking the cumulative recovery since the January trough to 6.7 per cent,” he said. 

“In dollar terms, Sydney’s median housing values are rising by roughly $4262 a week.”

A lack of available supply continued to be the main factor keeping upwards pressure on housing values, Lawless said. 

“Through June, the flow of new capital city listings was nearly 10 per cent below the previous five-year average and total inventory levels are more than a quarter below average.

“Simultaneously, our June quarter estimate of capital city sales has increased to be 2.1 per cent  above the previous five-year average.”

Although housing values continue to record a broad-based upswing, the pace of growth across most capitals eased in June. 

“A slowdown in the pace of capital gains could be a reflection of a change in sentiment as interest rate expectations revise higher,” Lawless said. 

“Higher interest rates and lower sentiment will likely weigh on the number of active home buyers, helping to rebalance the disconnect between demand and supply.”

Regional housing values have also trended higher, albeit at a slower pace relative to the capitals. 

The combined regionals index also recorded a fourth straight month of growth, taking housing values 1.2 per vent higher than the recent low in February. 

Monthly change in home values at June 30, 2023

▲ Source: CoreLogic

Lawless said the softer growth trend across regional areas of the country aligned with recent shifts in demographic factors.

“After regional population growth boomed through the worst of the pandemic, internal migration trends have normalised over the past year, resulting in less housing demand across regional markets,” he said. 

“Additionally, housing demand from overseas migration is skewed towards the capital cities rather than the regions.”

Regional Victoria is the only rest-of-state market where quarterly housing value trends remain negative, down 0.4 per cent in June to be -1.3 per cent over the quarter.