Market sentiment improves as capital cities and regional areas record broad-based gains
Australia’s housing market showed signs of recovery in February, with CoreLogic’s national Home Value Index rising by 0.3%. This modest increase follows a brief three-month decline that saw values dip by 0.4% nationally.
The growth was widespread, with nearly all capital cities and regional markets recording gains. Darwin (-0.1%) and Regional Victoria (unchanged) were the only exceptions.
Melbourne and Hobart led the monthly gains, both posting a 0.4% increase. This marked a turnaround for Melbourne, where home values had been declining for 10 consecutive months.
Meanwhile, Brisbane, Perth and Adelaide, which had previously been the strongest-performing markets, saw slower growth of 0.2% to 0.3%. Despite this, Adelaide and Brisbane continued to lead quarterly growth, rising 1.2% and 0.9%, respectively. Perth, however, experienced a slowdown, with quarterly growth at just 0.3% following downward revisions.
In Sydney and Melbourne, higher-priced properties drove the recovery. The upper quartile of the market outpaced other segments, reflecting historical trends where premium housing markets have been more responsive to interest rate changes.
Regional markets continued to outpace capital cities. The combined regional index rose 0.4% in February and 1.0% over the quarter. In contrast, capital city values saw a 0.3% monthly increase but remained 0.4% lower over the quarter. However, growth in regional markets was not uniform, with Sydney, Melbourne and Hobart outpacing their regional counterparts.
Tim Lawless (pictured above), research director at CoreLogic, attributed the market’s resilience to improved sentiment rather than an increase in borrowing capacity.
“Expectations of lower interest rates, which solidified in February, look to be flowing through to improved buyer sentiment,” he said.
Lawless also noted a rise in auction clearance rates, which have returned to long-term averages across major markets.
A decline in newly advertised properties may also be influencing market conditions. Over the four weeks to Feb. 23, new listings across the combined capitals were down 4.7% year-on-year and 1.5% below the five-year average.
“Although total advertised supply levels are almost 1% higher than a year ago, listings remain 7.9% below the previous five-year average and the reduced flow of fresh stock to market could be supporting some upward pressure on prices, especially if buyers are becoming more active amid higher sentiment and lower rates,” Lawless said.
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