Australia’s housing downturn has been easing since September, with value declines virtually flatlining in February – a positive momentum that has been carried through the first half of March, according to a new CoreLogic report.
CoreLogic’s Daily Home Value Index was up 0.3% across the five largest capitals through the month-to date, with Sydney leading the change with a 0.5% rise over the first 15 days of the month. Melbourne and Perth’s readings were 0.2% higher while Brisbane housing values were flat. Only Adelaide recorded a decline, slipping -0.2% over the period.
“On a rolling four-week basis, which provides a useful proxy for monthly change, Sydney (+0.8%), Melbourne (+0.2%) and Perth (+0.1%) are all recording a lift in values,” said Tim Lawless (pictured above), CoreLogic research director. “Brisbane remains unchanged over the past four weeks, and Adelaide is now the weakest of the five largest capitals with values down -0.4%.”
Lack of new listings
Alongside the return to a more positive trend in housing values is a persistently lower-than-normal flow of new listings coming onto the market.
Over the past four weeks, capital city listings were 19.9% below the previous five-year average for this time of the year.
“Such low advertised supply is likely to be a central factor keeping a floor under housing prices despite a clear drop in demand,” Lawless said. “At the same time, we have also seen a rise in auction clearance rates back to around the decade average.”
Overseas migration on the rise
Another factor supporting stronger market conditions is the surge of permanent and long-term migrants into the country.
“While most of the housing demand from overseas migration is likely to flow into the rental market, with vacancy rates so tight, we may be seeing a higher-than-normal portion of long-term or permanent migrants choosing to buy rather than rent,” Lawless said.
Bottom of the cycle still to come
The CoreLogic report noted that it’s still too early to call a bottom of the cycle, as the housing market continues to face some considerable downside risk.
“Interest rates may rise further from here, as well as the fact that we are yet to see the full impact on households from the aggressive rate hiking cycle to date,” Lawless said. “Additionally, economic conditions are set to weaken through the middle of the year, as household savings buffers are being depleted and labour markets are likely to loosen further.
“One of the key metrics to watch will be the flow of new listings coming on the market. Any sign of a larger-than-normal level of freshly advertised stock could signal that prospective vendors aren’t willing or able to wait out the downturn any longer. A rise in advertised supply to above average levels could be a signal this recent trend of growth has run out of steam.
“Given the uncertainty ahead of us, the next few months will be critical to understand whether the housing market is indeed moving through an inflection point or if it is simply the eye of the storm.”
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