CoreLogic’s July home value index shows a subtle rise in values across most of the capital cities, brought about largely by improved credit availability, lower mortgage rates and higher levels of confidence.
Home values held firm throughout July, following a consistent trend towards smaller month-on-month declines through the first half of the year, however, national values remain 8.3% lower than the market peak in September 2017.
Five out of eight capital cities recorded small price rises in July and regional areas of South Australia, Tasmania and the Northern Territory also climbed.
Monthly change in capital city home values
Australia’s two largest cities, Sydney & Melbourne, continue to drive the turnaround. Both cities have recorded price rises for two consecutive months, with Sydney now having risen 0.3% and Melbourne 0.4% from their market lows.
MONTHLY / ANNUAL
Melbourne ^ 0.2% ^ 8.2%
Hobart ^ 0.3% V 2.8%
Sydney ^ 0.2% V 9.0%
Brisbane ^ 0.2% V 2.4%
Adelaide V 0.3% V 0.8%
Perth V 0.5% V 8.9%
Darwin V 0.4% V 8.7%
Canberra V 0.3% ^1.1%
National 0%V 6.4%
Factors influencing the shift
The turnaround in housing conditions is being attributed to lower mortgage rates, improved access to credit, growing post federal election confidence amongst buyers and home sellers, recent tax cuts, improved affordability, and reduced numbers of homes advertised for sale. All of these factors have generated a stronger selling position for vendors.
National market status
The improved housing market conditions have lifted the annual rate of change to -6.4% nationally, with the annual rate of decline across the combined capitals index easing from a recent low of -8.4% to - 7.3%, while the combined regional markets are recording an annual rate of decline of -3.0%.
Unprecedented new apartment stock
Despite an unprecedented amount of new apartment stock entering the market, Sydney and Melbourne unit values have consistently outperformed the detached housing sector through the downturn, and this trend is continuing into the recovery phase.
Sydney house values remain -0.2% lower over the past three months, while unit values have shown a slight rise (+0.02%). In Melbourne, house values were down -0.3% over the most recent three-month period while unit values are 1.1% higher.
The stronger performance across the unit sector may be attributable to ongoing affordability challenges in Sydney and Melbourne which, according to CoreLogic, could be driving demand towards the medium to high density sector.
Values for higher density dwellings are generally lower, however it is thought that we may see some dampening of unit values in coming months - across areas where supply is elevated. This is because a large number of high-rise apartments that were sold off-the-plan are about to move onto the re-sale market.