Melbourne home values dip as Sydney gains slow
Australia’s housing market experienced a slight slowdown in November, with a 0.6% increase in values, according to CoreLogic’s Home Value Index (HVI).
This marks the smallest monthly gain since the growth cycle began in February, CoreLogic reported. However, despite the slowdown, the national HVI reached a new record high in November.
After a significant decline of -7.5% from its peak in April 2022 to a trough in January 2023, housing values have rebounded impressively, rising by 8.3% over the past 10 months, according to CoreLogic. This demonstrates a clear 'V'-shaped recovery in the market.
While the overall trends have slowed, there are noticeable variations across different cities. In November, three cities experienced a decline in housing values. Melbourne and Hobart both saw a decrease of -0.1%, while Darwin recorded a decline of -0.3%.
Sydney, which had been showing strong growth, experienced a significant slowdown, with a gain of only 0.3%, the smallest monthly increase during the recovery cycle. There is a possibility that Sydney could follow Melbourne's lead, with home values stabilising or even dipping lower in December, as they slipped into negative growth during the last week of the month, CoreLogic reported.
On the other hand, Perth witnessed an acceleration in housing values, posting the largest monthly gain since March 2021, at 1.9%. Brisbane and Adelaide also stood out, with a resilient and rapid pace of growth, recording increases of 1.3% and 1.2% respectively.
Tim Lawless (pictured above), CoreLogic's research director, highlighted the low levels of advertised supply in Perth, Brisbane, and Adelaide, coupled with above-average purchasing activity.
“This imbalance between available supply and demonstrated demand is keeping strong upwards pressure on housing values across these markets, despite the downside factors leading to weaker housing market conditions across the lower eastern seaboard,” Lawless said. “The Melbourne Cup day rate hike has clearly taken some heat out of the market, but other factors like rising advertised stock levels, worsening affordability and persistently low consumer sentiment are also acting as a drag on value growth in some markets.”
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The upper quartile of the Sydney and Melbourne markets has experienced slower growth conditions, with the most expensive quarter of the market in both cities recording the lowest rate of growth on a monthly and rolling quarterly basis, CoreLogic reported. Lawless noted that the more expensive end of the market tends to lead the cycles in these cities. As borrowing capacity reduces, there may be a shift in demand towards lower-priced housing, resulting in the broad middle of the market experiencing the strongest rate of growth in Sydney and Melbourne.
The growth rates between regional and capital city markets have converged, with both the combined capitals and combined regionals index recording a 0.6% increase in values in November. This convergence comes after regional markets had lagged behind their capital city counterparts in the recovery phase thus far. Regional Australia's housing values remain -1.8% below the historic high recorded in May 2022, with Regional Victoria (-6.7%) and Regional NSW (-5.5%) recording the largest shortfall from record levels.
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