The Reserve Bank’s decision to lift the cash rate in May has not dampened the nation’s house price rebound with both PropTrack and CoreLogic reporting strong growth for the past three months.
Low stock levels are one of the major drivers of the growth, with CoreLogic’s National Home Value Index recorded a third consecutive monthly rise, with the pace of growth accelerating sharply to 1.2 per cent in May.
This comes on the back of rises of 0.6 per cent in March and 0.5 per cent in April.
Sydney continued to lead the recovery, recording a 1.8 per cent lift in values in May, which is its highest monthly gain since September 2021.
The Harbour City hit its low point in January and since then property values have climbed 4.8 per cent, or about $48,390 in median dwelling value.
The median value of a home in Sydney is now $1.05 million.
According to CoreLogic’s figures, Brisbane and Perth were the only other capital cities to record a rise in home values above 1 per cent, at 1.4 per cent and 1.3 per cent respectively.
Melbourne and Adelaide almost made it, with each posting a 0.9 per cent increase in property values in May, followed by Hobart (0.5 per cent) and Darwin and Canberra (both 0.4 per cent).
CoreLogic’s Research Director Tim Lawless said the positive price growth was a result of persistently low stock levels running against high levels of 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.”
PropTrack
PropTrack’s Home Price Index also recorded a jump in May, with home prices rising 0.33 per cent, which is 1.55 per cent higher than the low point recorded in December.
Home prices in the combined capital cities have risen 1.34 per cent in the past three months, which is the strongest quarterly growth since the December quarter of 2021.
PropTrack Senior Economist and report author Eleanor Creagh said every capital city except Darwin had recorded price rises in May.
Canberra recorded the highest price growth at 0.65 per cent, while Perth chalked up a ).64 per cent increase.
Adelaide and Sydney tied for third spot, both recording a 0.58 per cent jump in prices, followed by Brisbane (0.33 per cent), Melbourne (0.22 per cent) and Hobart (0.07 per cent).
Darwin recorded a slight 0.01 per cent drop.
“The decision by the Reserve Bank to lift the cash rate in May has not deterred the current home price rebound,” Ms Creagh said.
“The rise in prices seen so far this year gathered pace in May, broadening and accelerating across markets.
“Supply constraints have eased slightly with respect to total stock for sale, but the flow of new listings remains soft.
“This is keeping a floor under prices, with sellers benefitting from less competition with other vendors.
“Market conditions have improved following five consecutive months of price growth, driven by stronger housing demand relative to stock on market.”
Regional areas
The trend in regional housing values has also picked up, with the combined regionals index rising 0.5 per cent in May, 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,” Mr 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 centred 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.”
According to PropTrack’s Home Price Index, the combined regional areas recorded 0.03 per cent growth.
Regional Queensland recorded the highest rise at 0.32 per cent, followed by regional WA and regional Tasmania (both up 0.27 per cent).
Only regional Victoria and regional NSW recorded price drops, at 0.2 per cent and 0.08 per cent respectively.
Premium markets
Mr Lawless said high-end markets in Sydney continued to lead the market recovery despite initially recording a larger drop in values.
Sydney’s upper quartile has the highest rate of value growth, up 5.6 per cent jump in 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,” Mr Lawless said.
“Although values across more expensive homes are rising more rapidly, at the end of May, dwelling 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.”
The future
Ms Creagh said auction activity had improved recently and clearance rates remained firm after rising above levels seen in the second half of 2022.
“This was a period when interest rates were rising rapidly and prices were falling in most markets,” she said.
“Although they are at or close to peak levels, interest rates may still rise further and the economy is also expected to slow.
“These factors may weigh on home prices in the months ahead.
“However, the continued tightness in the labour market, stronger housing demand and the limited supply environment are likely to support an ongoing recovery.”
