House prices increased across five of Australia’s eight capitals over August, the latest confirmation of the ongoing turnaround in residential market conditions.
Corelogic’s monthly home value index results recorded a 0.8 per cent increase in August, the first national monthly increase since October 2017 and the largest monthly increase since April 2017.
The most expensive quarter of the market led the uplift, as did a more rapid recovery in Australia’s largest capital cities, Sydney and Melbourne, which experienced their third consecutive month of increasing house prices.
Conditions continue to vary markedly by city—Sydney and Melbourne showed a clear turnaround, increasing 1.6 per cent and 1.4 per cent respectively over the month, while Adelaide, Perth and Darwin slipped lower.
Brisbane recorded its second successive month of increases, lifting by 0.2 per cent.
Corelogic research director Tim Lawless said that a key contributor to the housing recovery has not just been an increase in buyers but a lack of advertised stock.
“As stock levels continue to rise throughout spring, we will get a much better understanding of the depth of the current recovery.
“As listing numbers and auction volumes rise, clearance rates may soften if buyer demand doesn’t lift to match the increase in supply.”
Capital Economics economist Ben Udy said that the 0.8 per cent month-on-month increase means that the housing downturn is now well and truly over.
“We had previously anticipated that prices would rise by 1 per cent from their trough before the end of year 2019, but the rebound now appears to be much stronger.
“We now expect prices to rise by 5 per cent from their trough this year, ending 2019 at just above the level they were at the start of the year.”
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National house prices reached their largest annual falls in May this year at -7.3 per cent, which has slightly improved in August—lifting to -5.2 per cent.
After recording consecutive monthly declines since 2017, Sydney and Melbourne first experienced an increase in house prices in June, with Brisbane joining in a month later and recording an increase in house prices in July.
Corelogic’s index shows that the magnitude of declines across all segments of the housing market has slowed over recent months.
The middle 50 per cent of capital city properties has seen values increase by 0.4 per cent over the quarter, while the rate of decline has slowed for the most affordable quarter of properties.
“While the ‘recovery trend’ is still early, it does appear that growth trends are gathering some pace, particularly in the largest capital cities,” Lawless said.
The lift in house price values over the month aligns with consistent improvements in other housing market metrics.
Auction clearance rates continue to record strong results, with buyer demand and housing market sentiment responding positively to rate cuts, lower interest rates and some relaxation in credit policy.
“We have consistently heard that housing market confidence has improved and the data since then continues to confirm the improved sentiment.”