High-end markets showed strong growth in February, pointing to renewed momentum within a 'bellwether' segment that has historically proven to be an early indicator of market recoveries.
CoreLogic's Housing Chart Pack for March shows that the upper quartile of capital cities, or the top 25% of home values, rose 0.2% in February, following a -0.3% fall in January. The lower quartile still outperformed in comparison, rising 0.4% in February following a flat result in January.
CoreLogic Economist Kaytlin Ezzy said that while still lagging behind the lower quartile and middle market, the monthly change in capital cities' most expensive 25% of values has seen the sharpest turnaround in growth compared to last month.
"The upper 25% of values in Melbourne, Sydney and Hobart - which our research shows have historically been some of the most sensitive to rate changes - recorded the largest Improvements," she said.
"The top quartile is the one to watch as they tend to be a bellwether for broader market recoveries in those cities."
"If this momentum continues, the quarterly change in upper quartile values could turn positive and potentially outperform the lower quartile and middle market for the first time since August 2023."
Australia is not one housing market
As forecast last month, Sydney and Melbourne houses and units generally have the most to gain from a reduction in interest rates and that appears to be reflected in February's data, Ms Ezzy said.
"In Sydney and Melbourne, but also Hobart, many of the markets with a solid response to rate reductions are also seeing values well below their peak under recent interest rate rises, so easier access to credit may trigger a recovery trend in these markets."
Sydney
In Greater Sydney, the prestige SA3 Eastern Suburbs - North market - including Point Piper, Double Bay and Rose Bay - grew 2.0% month on month after falling -0.5% in January, marking a 250 basis-point turnaround. Hornsby followed, with values rising 1.1% in February, and posting a 200-basis-point turnaround from the previous month.
Ms. Ezzy said these markets have traditionally responded strongly to changes in financial conditions.
"It is possible that these kinds of markets have a stronger response to cash rate falls because people generally need more finance to buy into them."
"However, the RBA Board minutes and statement in February were fairly hawkish despite the rate cut, so there is some uncertainty as to whether the recent momentum will continue."
"For example, the Sydney clearance rate did lose a little exuberance in the week ending 2 March, with a final result of 64.5%, down from a recent high of 67.2% a couple of weeks prior.
Melbourne
Similarly, in Melbourne the biggest turnaround in capital growth occurred in the SA3 region of Stonnington East, where the value change lifted from a -1.9% drop in Jan to a 0.8% lift in February - or a 264 basis point lift in performance.
Other high-end markets like Manningham East, Bayside and Glen Eira also showed a strong turnaround.
Hobart
The Hobart - North East region, which sits towards the high-end of the local market, saw the highest capital growth turnaround in the city in February, with a median value of $709,000.
This month's Home Value Index showed Hobart tied with Melbourne to lead monthly gains, recording the largest month-on-month change across the capitals (up +0.4%) where home values have previously been among the weakest.
Sentiment at play
Ms. Ezzy commented that overall the market has had a strong response to the February rate cut, with the daily trend showing a material Improvement in the Home Value Index prior to the cut.
"This suggests sentiment was also at play."
"If buyers are out in market expecting they can access more finance, this may have contributed to a strong market response."
Highlights from the March 2025 Housing Chart Pack include:
- CoreLogic estimates the combined value of residential real estate held steady in February at $11.2 trillion.
- National home values fell -0.1% over the rolling quarter, with the capitals down -0.4% and the regions up 1.0%.
- CoreLogic estimates there were 40,085 sales nationwide in February, taking the rolling 12-month count to 532,244. While the annual measure is up 6.2% compared to last year, sales activity has slowed over the three months to February.
- Properties are taking longer to sell, with the national median time on the market rising from a recent low of 27 days in Q3 2024 to 42 days over the three months to February.
- Vendor discounting rates have continued to loosen over the summer, with the national rate expanding from 3.5% at the end of spring to 3.6%.
- The rolling 12-month change in national rental values has continued to slow, with rents up 4.1% over the year to February, down from an 8.3% increase seen over the year to March 2024. Despite a seasonal uptick in the quarterly measure (1.1%, up from -0.1% over Q3 2024), the annual trend will likely continue to lose momentum
Download a complete copy of CoreLogic Australia’s March Chart Pack online.
CoreLogic Australia