High-end market shows signs of recovery in February
Australia’s high-end housing market rebounded in February, signalling potential early signs of a broader market recovery.
CoreLogic’s latest Housing Chart Pack showed that the upper quartile of home values in capital cities increased by 0.2 per cent in March after a 0.3 per cent decline in January.
CoreLogic economist, Kaytlin Ezzy, said that although high-end properties are still lagging behind the lower quartile market, which rose 0.4 per cent in February, its turnaround suggested renewed momentum.
Ezzy said the capital price growth is significant as the top 25 per cent of home values in Melbourne, Sydney and Hobart showed the strongest growth compared to last month.
CoreLogic’s research showed that these markets are historically the most sensitive to interest rate shifts and have been early indicators of broader market trends.
“The top quartile is the one to watch as they tend to be a bellwether for broader market recoveries in those cities,” Ezzy said.
“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.”
Ezzy said that Sydney and Melbourne houses and units usually have the most to profit from a reduction in interest rates.
“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,” she said.
CoreLogic’s March Housing Chart Pack indicated that Australia’s total estimated value of residential real estate held steady at $11.2 trillion in February.
Greater Sydney’s prestige markets experienced significant growth, with the eastern suburbs, north SA3 region, including Point Piper, Double Bay and Rose Bay, rising by 2 per cent in February, reversing a 0.5 per cent decline in January.
Greater Sydney’s Hornsby also experienced a notable turnaround, with values increasing by 1.1 per cent, a 200-basis-point improvement from the previous month.
Ezzy said these markets typically respond to strong 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,” she said.
However, she cautioned that the Reserve Bank of Australia’s (RBA) recent stance creates some uncertainty about whether the growth trend will persist.
“For example, the Sydney clearance rate did lose a little exuberance in the week ending 2 March, with a final result of 64.5 per cent, down from a recent high of 67.2 per cent a couple of weeks prior,” she said.
CoreLogic data showed that Melbourne’s high-end market also rebounded, with the SA3 region of Stonnington East experiencing the sharpest recovery.
It indicated that values in Stonnington rose by 0.8 per cent in February after dropping 1.9 per cent in January, a 264-basis-point turnaround.
Other affluent areas, including Manningham East, Bayside and Glen Eira, were also reported to grow strongly.
Hobart’s north-east region, a premium segment of the local market, saw the strongest capital growth recovery in the city, with a median home value of $709,000.
The Home Value Index for February showed Hobart tied with Melbourne for the highest monthly gains across the Australian capital, both at 0.4 per cent.
Ezzy pointed to buyer sentiment as a key factor in February’s growth, noting that home values improved even before the RBA’s rate cut.
“If buyers are out in the market expecting they can access more finance, this may have contributed to a strong market response,” she said.