3 capital cities have declined in value in the last 3 months
Despite headline growth remaining positive over the July quarter, CoreLogic expressed that momentum has left the growth cycle.
CoreLogic has announced that national home values rose by 0.5 per cent in July, this increase on par with the 0.5 per cent increase recorded in June, and marking the 18th consecutive monthly increase in home values nationally.
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Following the 7.5 per cent decline recorded between May 2022 and January 2023, the firm noted that the national home value index has increased by 13.5 per cent, and values have risen to “new record highs” since November of last year.
Despite this positive headline growth, CoreLogic relayed that “it is clear momentum is leaving the cycle and conditions are becoming more diverse”.
That’s headlined by three capitals having recorded a decrease in values over the past three months alone. Melbourne led the decline with a fall of 0.9 per cent, while Hobart prices fell 0.8 per cent and Darwin values dropped by 0.3 per cent.
Sydney’s rolling quarterly pace of growth was said to have “slowed markedly” over the same period to 1.1 per cent, a drastic drop from the 5 per cent quarterly gain recorded at the same time last year.
According to CoreLogic, the mixed bag of home values is impacting the growth in national home values, which were up just 1.7 per cent over the past three months compared to the 3.2 per cent increase seen this time last year.
Despite the slowing growth, the mid-sized capitals are bucking the trend, with Perth’s quarterly pace of growth at 6.2 per cent and Adelaide’s accelerating to 5 per cent.
For Adelaide, it’s the “fastest rolling quarterly pace of growth since May 2022”.
CoreLogic’s research director Tim Lawless shared that “available supply is a key factor explaining the diverse outcomes in housing growth trends”.
“The number of homes for sale in Brisbane, Adelaide and Perth is more than 30 per cent below average for this time of the year, while weaker markets like Melbourne and Hobart are recording advertised supply well above average levels,” said Lawless.
With the deterioration in borrowing capacity and affordability factors, CoreLogic relayed the conditions are skewing demand towards the lower price points of the market. Lower quartile dwelling values across the combined capital cities are up 3.3 per cent over the past three months, as opposed to the 0.8 per cent value increase seen in the upper quartile.
CoreLogic highlighted that lower quartile values are leading the growth trend across every capital city except Darwin and Canberra, with these markets also the two most affordable capitals after adjusting for local incomes.
Growth in regional housing values has lagged the capitals, with the rolling quarterly rise of 1.3 per cent across the combined regionals index falling short of the 1.8 per cent gain across the combined capitals.
Regional Western Australia led the charge with growth of 4.7 per cent, regional South Australia saw growth of 3.2 per cent, and regional Queensland posted growth of 2.8 per cent over the quarter.
Within the rest of state areas, regional Victoria was the only market to incur a decline in values over the three months to July, with values dropping by 1.4 per cent.
With unit prices now rising faster than houses across most of the capitals, CoreLogic detailed that the only exceptions over the past three months were Darwin and the ACT, where affordability pressures are less acute and historic supply levels across the medium to high density sector have been more apparent.
“With stretched housing affordability, lower borrowing capacity and a lift in both investor and first home buyer activity, it’s not surprising to see the unit sector outperforming for a change,” he concluded.