Housing markets continued to surge throughout Australia in May, with CoreLogic’s national Home Value Index rising by 2.2 per cent over the month.
The rise in May was a stronger result than April (1.8 per cent), but weaker than March, when values surged by 2.8 per cent, which was the highest month-on-month increase in 32 years.
CoreLogic’s Research Director Tim Lawless said growth conditions remained broad-based in terms of both geography and across the housing types and valuation segments.
“Values were up by more than 1 per cent across every capital city over the month, with both house and unit values lifting across the board,” Mr Lawless said.
He said that of the 334 SA3 sub-regions analysed by CoreLogic, 97 per cent recorded a lift in housing values over the past three months.
“Such a synchronised upswing is an absolute rarity across Australia’s diverse array of housing markets,” Mr Lawless said.
For the second time in three months, growth conditions in capital city home values outpaced the regional markets.
Capital city growth outpaces regional areas
The combined capital city index rose 2.3 per cent in May compared with a 2 per cent rise across the combined regional areas.
Hobart recorded the biggest gain of any capital city at 3.2 per cent, followed by Sydney at 3 per cent.
Values in Darwin rose by 2.7 per cent in May, with Brisbane recording a 2 per cent increase, Adelaide at 1.9 per cent, Melbourne at 1.8 per cent, Canberra at 1.7 per cent and Perth values rising by 1.1 per cent for the month.
Across the non-capital city regions, conditions were more diverse, with regional NSW leading the monthly gains at 2.5 per cent, while values in regional WA had the weakest result, falling by 0.1 per cent.
Mr Lawless said the fundamentals driving strength in the housing market remained in place.
“The combination of improving economic conditions and low interest rates is continuing to support consumer confidence which, in turn, has created persistently strong demand for housing,” he said.
He said advertised supply also remained well below average.
“This imbalance between demand and supply is continuing to create urgency amongst buyers, contributing to the upwards pressure on housing prices,” Mr Lawless said.
Trends have shifted
Mr Lawless said despite the consistently strong headline results, the underlying trends have shifted over the past year.
“The most expensive end of the market is now driving the highest rate of price appreciation across most of the capital cities, whereas early in the growth cycle it was the most affordable end of the market that was the strongest,” he said.
“From a geographic perspective, it was the smaller capital cities that led the housing market out of the COVID slump, but now Sydney has risen through the ranks to record the largest capital gain over the past three months, with values up 9.3 per cent.”
He said although housing values were now rising the fastest once again in Sydney, at least in trend terms, the annual growth rate is generally higher across the smaller capitals, as well as regional New South Wales and regional Tasmania.
In May, Darwin cracked the 20 per cent annual growth barrier, with values now 20.3 per cent higher over the past 12 months. For Darwin dwellings, this is the strongest annual gain on record.
Housing values across regional New South Wales are up 18.6 per cent over the past year, while in regional Tasmania, values are 18.1 per cent higher.
The weakest housing markets over the past year have been in regional Western Australia, which recorded 0 per cent growth, and Melbourne (5 per cent growth), where the extended lockdown has created a more significant drag on the annual growth rate.