CoreLogic’s national Home Value Index was up 0.6% in April, with half of Australia’s capitals rising by more than 1% but Sydney & Melbourne’s quarter of negative growth dragging headline growth rates down.
Sydney and Melbourne, which have the heaviest weighting in the Home Value Index, were the main drag on the headline growth rates. Sydney housing values recorded the third consecutive month-on-month decline, down 0.2%, while Melbourne values were flat (-0.04% when taken out to the second decimal place). Technically values are down over three of the past five months in Melbourne. Hobart also recorded a negative monthly change (-0.3%), the city’s first monthly fall in 22 months.
Demonstrating the diversity in housing conditions across the broad regions of Australia, Adelaide enjoyed 1.9% growth in April, leading the pace of capital gains, followed by Brisbane (1.7%), Canberra (1.3%) and Perth (1.1%). However, it’s clear that Brisbane moved through its peak of growth (8.5%) in December last year and Adelaide (7.4%) in January.
Perth and Darwin are the exceptions, where the rolling quarterly trend has gathered some steam since late last year. Perth housing values were up 2.4% over the three months ending April compared with a recent lull through late last year when the quarterly trend fell to just 0.4%.
Monthly change in capital city home values
Why is growth in Perth and Darwin accelerating?
A rebound in migration rates as state and international borders re-opened could partially explain the renewed exuberance, along with persistently low advertised stock levels and strong economic conditions, according to CoreLogic.
While ABS internal migration data by greater capital city is currently only reported to June 2021, the data points to a vast uplift in internal migration to Perth for the year (6,468), a substantial turn-around from the previous four-year average (-3,735).
Regional markets ‘somewhat insulated’
Regional Australian housing markets have been somewhat insulated from the slowdown, with housing values up 1.4% in April across the combined regionals index, compared with a 0.3% gain across the combined capitals. Advertised stock levels remain 42% below the previous five-year average in the regions, while the volume of home sales is holding 20% above the previous five-year average. The imbalance between available supply and demonstrated demand is a key factor supporting growth in housing prices across Regional Australia, however the trend rate of growth is generally slowing as affordability constraints become more challenging.
Annual growth trend in home values now falling sharply
With the national growth reading dropping from a recent peak of 22.2% over the year ending November 2021, to 16.7% over the most recent 12-month period, the housing market shows signs of approaching its cyclical peak.
As the stronger months of capital gain from early 2021 fall out of the 12- month calculation, CoreLogic says we will see the annual change reducing more sharply over the coming months.
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