The CoreLogic August home value index results showed that national dwelling prices increased by 0.8% over the month. This is the first monthly increase in values since October 2017.
Housing values across capital cities rose by 1%, with Sydney (1.6%), Melbourne (1.4%) and Canberra (0.8%) leading the way.
While the lift in housing values is substantial, the recent growth is a continuation of the trend seen throughout the year whereby value falls were consistently losing momentum, and have now started to rise.
Adelaide (-0.2%), Perth (-0.5%) and Darwin (-1.2%) recorded losses. But these figures are a significant improvement on what these three cities recorded over the last quarter and year.
Looking at annual dwelling figures, only a few capital cities avoided falls over the past year – namely Hobart (3.1%), Canberra (1.2%) and Adelaide (1.1%).
However, a greater number of regional areas (11 of the 43) showed an annual increase. According to CoreLogic research director Tim Lawless, this “may well be a hint that the value growth occurring in Sydney and Melbourne is already beginning to spill over into nearby regions.”
The Australian Bureau of Statistics (ABS) has also reported a growth in home lending, with the most recent data release showing an increase of 4.7% for investment lending in July. Lending to owner-occupiers was up 5.3%.
The number of owner occupier non-first home buyers rose by 4.0% in July. This was the first time in many months that the growth in non-first home buyers has exceeded the growth of first home buyers.
What’s driving this growth?
The significant lift in dwelling values in August aligns with a consistent increase in auction clearance rates and a deeper pool of buyers at a time when the volume of stock advertised for sale remains low, Tim Lawless says.
Maree Kilroy from BIS Oxford Economics believes increased investment activity has resulted from a boost in sentiment following the Coalition government’s federal election victory.
Tim Lawless tends to agree, “It’s likely that buyer demand and confidence is responding to the positive effect of a stable federal government, as well as lower interest rates, tax cuts and a subtle easing in credit policy,”
“While the recovery trend is still early, it does appear that growth trends are gathering some pace, particularly in the largest capital cities.”
Where to from here?
“A key contributor to the housing recovery has been the increase in buyers, but also a lack of advertised stock. As stock levels continue to rise throughout spring, we will get a much better understanding of the depth of the current recovery,” Lawless says.
“As listing numbers and auction volumes rise, clearance rates may soften if buyer demand doesn’t lift to match the increase in supply.”
Whilst Auction clearance rates continue to climb (and are now at their highest levels since early 2017 in both Sydney and Melbourne), total inventory levels remain 17% lower than a year ago.
So whilst monthly sales activities trends upwards, sales are still well below the decade average.
