The pace of home values rising across Australia has accelerated.
According to CoreLogic’s national Home Value Index, May marked the third consecutive monthly rise, with the pace of growth accelerating sharply to 1.2 per cent that month.
After finding a floor in February, home values increased 0.6 per cent and 0.5 per cent through March and April respectively.
The May surge was the strongest monthly growth since November, 2021.
Sydney continues to lead the recovery trend, posting a 1.8 per cent lift in values over the month, recording the NSW capital’s highest monthly gain since September 2021.
Since moving through a trough in January, median home values have risen by 4.8 per cent, or $48,390.
Brisbane (1.4 per cent) and Perth (1.3 per cent) are the only other capitals to record a monthly gain of more than 1 per cent, however, the rise in values was broad-based with the rate of growth accelerating across every capital city last month.
CoreLogic research director Tim Lawless said the positive trend was a symptom of persistently low levels of available housing supply running up against rising housing demand.
“Advertised listings trended lower through May with roughly 1800 fewer capital city homes advertised for sale relative to the end of April,” he said.
“Inventory levels are 15.3 per cent lower than they were at the same time last year and 24.4 per cent below the previous five-year average for this time of year.
“With such a short supply of available housing stock, buyers are becoming more competitive and there’s an element of FOMO creeping into the market.
“Amid increased competition, auction clearance rates have trended higher, holding at 70 per cent or above over the past three weeks.
“For private treaty sales, homes are selling faster and with less vendor discounting.”
The trend in regional housing values has also picked up, with the combined regionals index rising half a per cent in April, following a 0.2 per cent and 0.1 per cent rise in March and April.
“Although regional home values are trending higher, the rate of gain hasn’t kept pace with the capitals,” Lawless said.
“Over the past three months, growth in the combined capitals index was more than triple the pace of growth seen across the combined regionals at 2.8 per cent and 0.8 per cent respectively.
“Although advertised housing supply remains tight across regional Australia, demand from net overseas migration is less substantial.
ABS data points to around 15 per cent of Australia’s net overseas migration being centered in the regions each year.
“Additionally, a slowdown in internal migration rates across the regions has helped to ease the demand side pressures on housing.”
Premium housing markets in Sydney continue to lead the recovery trend.
After recording a larger drop in values, Sydney’s upper quartile (the most expensive quarter) stands out with the highest rate of growth, gaining 5.6 per cent over the past three months compared with a 2.6 per cent rise in more affordable lower quartile values.
“Buyers targeting the premium sector of the market are still buying at well below peak prices,” Lawless said.
“Although values across more expensive homes are rising more rapidly, at the end of May, home values across Sydney’s upper quartile remained 11.8 per cent below the January 2022 peak.
“This is the equivalent to a saving of around $213,000 from the cyclical high.”
Despite the recent gains, most housing markets are still recording housing values that are well below recent peaks.
Perth is the only capital city where home values have returned to record highs, while Hobart values remain the lowest relative to the city’s recent cyclical peak in May last year, down 12.6 per cent.
Sydney home values are still 9.6 per cent below the January 2022 peak, Brisbane’s are 9.4 per cent below the June 2022 peak and Melbourne is down 8.2 per cent from a peak in February last year.
