The Australian housing market has seen a significant acceleration in its recovery, according to the latest report from CoreLogic.
The national Home Value Index (HVI) has recorded its strongest monthly growth since November 2021, with home values increasing by 1.2% in May. This marks the third consecutive monthly rise in the Home Value Index, following a period of decline earlier this year.
Sydney continues to lead the recovery trend, with home values increasing by 1.8% over the month of May – the city’s highest monthly gain since September 2021. Since hitting a trough in January, home values in Sydney have risen by 4.8%, equivalent to a $48,390 increase in median dwelling value.
Most capitals see growth
While Sydney is leading the way, other cities are also seeing positive growth. Melbourne saw a 0.9% increase in home values over May, while Brisbane and Adelaide saw increases of 1.4% and 0.9%. Perth saw an increase of 1.3%.
Despite these positive signs, there are still concerns about the long-term outlook for Australia’s housing market. Capital city home values dropped by 9.7% over a period of ten months earlier this year – not quite the largest drop on record, but certainly one of the sharpest declines seen in recent years.
While home values have been steadily increasing since February, they are still down by 7.1% compared to their peak in April 2022. This suggests that there is still some way to go before Australia’s housing market fully recovers from its recent downturn, but values are still higher than before the pandemic.
What’s the outlook?
There are several factors that could impact on Australia’s housing market going forward. One key concern is the possibility of further interest rate hikes – if interest rates rise significantly, this could put pressure on homeowners who are already struggling with high levels of mortgage debt.
However, it could equally be argued that homebuyers have already priced in several more interest rate increases and the market is rising regardless.
Another factor that could impact on the housing market is consumer sentiment. Despite the recent uptick in home values, many Australians remain cautious about the economy and their own financial situation. If consumer confidence remains low, this could limit demand for housing and slow down the market’s recovery.
While there are still some concerns about the long-term outlook for Australia’s housing market, the recent uptick in home values is certainly a positive sign.
With selling conditions improving and more vendors expected to take advantage of the improving market conditions, we could see further growth in the coming months.
However, it will be important to keep an eye on factors such as interest rates and consumer sentiment
Monthly change in capital city home values