CoreLogic’s JANUARY Home Value Index reveals that since March 2020, housing values across regional Australia have increased by 32%, compared to a 20% lift in values across the combined capitals.
This has been substantially driven by the pandemic inspired flight from cities as more flexible work policies combine with a desire for different lifestyles. Another contributing factor is that inventory remains low across regional Australia, with advertised stock levels finishing the year 35.9% below the five-year average. By comparison, housing stock in capital cities is only 14.2% below the five-year average.
Across the month of January, regional values rose 2.2%, the highest rate in nine months, but Queensland showed the nation a clean set of heels by rising 2.4%. It’s important to remind our readers though that over the past year, the strongest regional markets have been in New South Wales (29.8%) and Tasmania (29.5%).
A two-speed market has emerged
Housing values rose 1% in December, which was slower than November’s 1.3% rise. This was a continuation of the slowing rate of growth First National Real Estate has been observing since March last year.
However, whereas Brisbane prices surged by 2.9%, in Melbourne prices experienced a 0.1% fall. That was the first fall in prices since October 2020, after Melbourne had just completed a second lockdown lasting 111 days.
Brisbane and Adelaide go their own way
Brisbane and Adelaide, along with Regional Queensland, have turned out to be the only broad regions where there’s no sign of growth rates slowing down, yet. For these three, the monthly rate of growth reached a new cyclical high in December.
Primarily, these regions are more affordable than the other capitals and strong interstate migration continues to drive demand. Additionally, the trend of properties advertised for sale remains well below average in these markets.
Melbourne and Sydney cooling
Momentum has slowed sharply in the nation’s two biggest markets – Sydney and Melbourne. A big lift in newly advertised listings through December was the key factor in this turnaround, but affordability constraints are clearly becoming an issue. Both cities recorded their softest monthly reading since October 2020.
Upper quartile leads the slowdown
As is always to be expected, the upper quartile leads with the greatest gains or losses. Across the combined capitals, premium property values were up 2.6% in the December quarter compared to the lower quartile and broad middle market rising 3.7%.
This would suggest, as is more broadly thought, that after such a strong growth cycle the market is now entering a moderating phase, which may lead to a reduction in prices in some markets throughout 2023.