The Australian housing market has shown signs of resilience, with February marking a slight uptick in housing values. According to CoreLogic’s national Home Value Index, housing values rose by 0.3 per cent in February, ending a three-month downturn. This improvement has softened the national measure of home values, which now shows a 0.4 per cent decline over the period.
This broad-based increase in housing values was observed across most regions, with Darwin (-0.1 per cent) and regional Victoria (flat) being the only exceptions. CoreLogic suggests that this could signal an inflection point in growth trends across the Australian housing market, offering hope for homeowners and investors alike.
Capital Cities Lead the Way
Melbourne and Hobart emerged as the top performers among capital cities, both recording a 0.4 per cent rise in housing values. For Melbourne, this increase is particularly significant as it marks the end of a 10-month streak of declining home values. Meanwhile, Brisbane, Perth, and Adelaide, which were previously strong growth markets, saw more modest monthly changes of 0.2–0.3 per cent. Despite this, Adelaide and Brisbane continue to lead quarterly growth trends, with increases of 1.2 per cent and 0.9 per cent, respectively.
In Sydney and Melbourne, the return to growth has been primarily driven by high-value properties. Upper-quartile house values are leading monthly gains in both cities, following significant market declines. This aligns with CoreLogic’s earlier research, which indicates that premium housing markets are particularly sensitive to rate cuts.
Improved Sentiment Fuels Growth
CoreLogic’s research director, Tim Lawless, highlighted that the improved housing conditions are more closely tied to better sentiment rather than increased borrowing capacity. “Expectations of lower interest rates, which solidified in February, appear to be enhancing buyer sentiment,” Lawless said. This sentiment shift is also reflected in auction clearance rates, which have improved and returned to around long-run average levels across major auction markets.
Interestingly, this improvement in sentiment comes amid broader policy changes in the Australian housing market. For instance, Australia’s ban on foreign purchases of established homes has been a significant move to address rising housing costs and improve affordability for local buyers. Such measures may further influence buyer confidence and market dynamics in the coming months.
Regional Markets Outperform Capital Cities
Regional housing markets showed more substantial growth than capital cities in February. The combined regional index rose by 0.4 per cent over the month and 1.0 per cent over the rolling quarter, compared to a 0.3 per cent monthly rise and 0.4 per cent quarterly fall in capital city values. However, there were variations, with Sydney, Melbourne, and Hobart showing stronger monthly changes than their regional counterparts.
What Does This Mean for the Housing Market?
The February data suggests that the Australian housing market may be turning a corner, with improved sentiment and regional growth driving the slight rise in housing values. While high-value properties are leading the recovery in Sydney and Melbourne, regional markets continue to outperform capital cities, offering opportunities for buyers and investors.
As expectations of lower interest rates solidify, buyer sentiment is likely to remain strong, potentially supporting further growth in housing values. However, it’s important to monitor market trends closely, as regional variations and economic factors could influence future performance.
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Stay tuned for more updates and insights on housing values, market trends, and financing options. For personalised advice, contact Index Finance today and let us help you make informed decisions for your financial future.
