Luxury housing segment sees strongest turnaround in growth
Australia’s high-end property market showed renewed growth in February, signalling potential momentum in a segment often seen as an early indicator of market trends, according to CoreLogic’s March Housing Chart Pack.
Data revealed that the top 25% of home values across capital cities increased by 0.2% in February, reversing a 0.3% decline in January. While the upper quartile saw gains, the lower quartile continued to outperform, rising 0.4% after remaining flat the previous month.
CoreLogic economist Kaytlin Ezzy (pictured above) noted that while the most expensive segment still lags behind the broader market, it has seen the most significant turnaround in growth.
“The upper 25% of values in Melbourne, Sydney and Hobart – which our research shows have historically been some of the most sensitive to rate changes – recorded the largest improvements,” she said. “If this momentum continues, the quarterly change in upper quartile values could turn positive and potentially outperform the lower quartile and middle market for the first time since August 2023.”
Sydney and Melbourne, which have traditionally been sensitive to interest rate shifts, appear to be benefiting the most from expectations of easing financial conditions.
“In Sydney and Melbourne, but also Hobart, many of the markets with a solid response to rate reductions are also seeing values well below their peak under recent interest rate rises, so easier access to credit may trigger a recovery trend in these markets,” Ezzy said.
In Greater Sydney, the high-end Eastern Suburbs – North region, which includes Point Piper, Double Bay and Rose Bay, saw home values rise by 2% in February after a 0.5% decline in January. Hornsby followed, with values increasing by 1.1%, reflecting a sharp rebound.
“It is possible that these kinds of markets have a stronger response to cash rate falls because people generally need more finance to buy into them,” Ezzy said.
However, she cautioned that uncertainty remains, given the Reserve Bank of Australia's (RBA) cautious stance despite the recent rate cut. For example, the Sydney clearance rate did lose a little exuberance in the week ending March 2, with a final result of 64.5%, down from a recent high of 67.2% a couple of weeks prior.
Melbourne’s strongest recovery was in Stonnington East, where property values shifted from a 1.9% drop in January to a 0.8% increase in February — a 264-basis-point improvement. Other high-end areas, including Manningham East, Bayside and Glen Eira, also saw notable gains.
In Hobart, the North East region, which sits at the higher end of the local market, recorded the city’s largest value rebound, with a median home price of $709,000. The latest Home Value Index showed that Hobart and Melbourne led monthly gains, each rising by 0.4%.
“This suggests sentiment was also at play,” Ezzy said. “If buyers are out in market expecting they can access more finance, this may have contributed to a strong market response.”
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