CoreLogic's national Home Value Index (HVI) rose 0.6% in March, on par with February’s increase, taking the current upswing in housing values through its 14th straight month of growth.
Since declining -7.5% between April 2022 and January 2023, the national HVI has increased 10.2%, or, in dollar terms, by approximately $71,832, rising to new record highs each month since November last year.
Every capital city except Darwin (-0.2%) recorded a rise in dwelling values over the month, although CoreLogic's research director, Tim Lawless, notes the monthly gains continue to be punctuated by diversity.
“At one end of the scale we have Perth’s housing market where values were up 1.9% over the month, followed by Adelaide and Brisbane with 1.4% and 1.1% growth. The remaining capitals are showing much lower rates of change, although Melbourne is the only capital city to record a negative quarterly movement, down -0.2% over the first three months of the year.”
The national quarterly pace of growth has accelerated from 1.4% in Q4 last year to 1.6% in Q1 2024. Although housing values are rising faster than at the end of last year, the quarterly trend of growth has halved relative to the middle of last year when home values were rising 3.3% quarter-on-quarter.
“Rate hikes, cost of living pressures and worsening housing affordability are all factors that have contributed to softer housing conditions since mid-last year. However, an undersupply of housing relative to demand continues to keep upwards pressure on home values despite these headwinds,” Mr Lawless said.
“The diversity in housing value outcomes can be explained by significant differences in factors like housing affordability, demand-side pressures from population growth and shortcomings in housing supply. Focusing on the extreme growth conditions in Perth, despite such a rapid pace of capital gains, housing values remain relatively affordable compared with the larger capital cities. Housing remains in short supply and purchasing demand is still high due to interstate and overseas migration rates that are well above average.”
Last month’s ABS population data showed some of the extremes in both interstate and overseas migration trends for WA more broadly. Net overseas migration to WA was running well above average at 18,122 in the September quarter of last year (up from a decade average of 4,639 per quarter), a trend seen in most states. Unlike some of the states, net interstate migration held well above the previous decade average of -96, reaching 2,237 in the quarter. The extreme flip in demographic trends has delivered a significant positive demand shock across WA housing.
After being led by the upper quartile most of last year, the strongest growth conditions have migrated to the lower quartile across most capital city markets. Across the combined capital cities, lower quartile home values increased by 3.1% in the first quarter of the year compared with a 0.7% rise across the upper quartile of the market. This trend of stronger conditions across the lower value sector was evident in each of the major capitals.
“With housing affordability becoming more challenging and borrowing capacity lower than a year ago, it’s no surprise to see demand being skewed towards the middle-to-lower end of the value spectrum,” Mr Lawless said.
Regional housing markets are also recording a rise in values, with similar levels of diversity as their capital city counterparts. Regional Victoria stands out with the softest growth conditions, with values down -0.3% in the first quarter of the year; the only broad ‘rest of state’ region to record a decline in values in the year-to-date.
The volume of home sales through the first quarter of the year was estimated to be 9.5% higher relative to Q1 last year, although comparison with a year ago is from a relatively low base, with the housing market bottoming out from the downturn at the beginning of last year. Compared to the previous decade average for this time of the year, dwelling sales are estimated to be 3.7% higher.
CoreLogic Australia