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According to CoreLogic, Australia’s positively trending home values are reliant on two key metrics to ensure they continue to grow through the middle of 2023.
February saw Australian home value falls continue to ease in momentum. Sydney led the charge as values in the harbour city reported their first month-on-month rise (0.1 per cent) in 12 months.
CoreLogic’s Daily Home Value Index (HVI) revealed the positive momentum has continued from February through March, with the HVI figure up 0.3 per cent across Australia’s five largest capital city markets through the month-to-date.
Home values in the NSW capital are 0.5 per cent higher over the first 15 days of March, followed by a 0.2 per cent increase in Melbourne and Perth. Brisbane homes have maintained their February values, while Adelaide recorded a slight 0.2 per cent decline.
On a rolling four-week basis, which the research firm explained provides a useful snapshot of monthly changes, Sydney’s values jumped 0.8 per cent.
Tim Lawless, head of research at the firm, has labelled the flow of new listings as “one of the key metrics to watch” with regard to ensuring this trend continues.
“The return to a more positive trend in housing values has occurred alongside a persistently lower than normal flow of new listings coming on the market,” he said.
According to CoreLogic, capital city listings over the past four weeks are tracking 19.9 per cent below the previous five-year average for this time of the year.
“Such low advertised supply is likely to be a central factor keeping a floor under housing prices despite a clear drop in demand. At the same time, we have also seen a rise in auction clearance rates back to around the decade average,” he said.
“Any sign of a larger-than-normal level of freshly advertised stock could signal that prospective vendors aren’t willing or able to wait out the downturn any longer,” he warned.
“A rise in advertised supply to above-average levels could be a signal this recent trend of growth has run out of steam,” Mr Lawless added.
Even with the resurgence of long-term overseas migrants entering Australian shores likely to flow into the rental market rather than home ownership, Mr Lawless heralded this trend as supporting improved market conditions, especially if we see a “higher-than-normal portion of long-term or permanent migrants choosing to buy rather than rent.”
He has declared, “It’s still too early to call a bottom of the cycle,” due to a plethora of factors, including potential interest rate hikes in the coming months as well as the fact that the full impact of the Reserve Bank of Australia’s (RBA) 10 consecutive rate hikes has yet to be completely felt.
“Additionally, economic conditions are set to weaken through the middle of the year, as household savings buffers are being depleted and labour markets are likely to loosen further.”
He concluded, “The next few months will be critical to understanding whether the housing market is indeed moving through an inflection point or if it is simply the eye of the storm.”
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