CoreLogic’s February Home Value Index showed a deceleration in the rate of property price falls last month, with the national index falling by just-0.14%, the smallest monthly decrease since May 2022.
The increase in Sydney dwelling values by 0.3% was the primary factor behind this trend. Darwin was the only city to record a steeper monthly fall in February, with every other city except Hobart seeing housing values fall by less than half a per cent.
Tim Lawless, CoreLogic’s research director, attributed the stabilisation in housing values to consistently low advertised supply levels and a rise in auction clearance rates. However, he also cautioned that the improving trend might be short-lived due to higher interest rates and lower sentiment.
Could prices have nearly finished falling?
The upper quartile of the combined capital city housing market drove the stabilising trend in February, with an increase of 0.1%. Although declines continued across the lower value segments of the market, they stabilised witha-0.1% decline across the lower quartile and a -0.3% decline across the broad middle of the market.
In the past 12 months, the upper quartile has led the downturn, dropping by-13.5% in value across the combined capital cities, while the lower quartile rose by 1.7%.
Regional dwelling values fell by-0.3% in February, compared to a -0.1% decline across the combined capital cities. However, this result was mainly due to the monthly rise in Sydney housing values rather than a larger fall in the regional market values. The combined regionals index is down by-7.7% since peaking in June last year, while the combined capital cities index has dropped by-9.7%since peaking slightly earlier in April 2022.
While it’s too early to call the bottom of this market cycle, a growing number of Australians are of the belief that interest rates will have stopped rising by spring and that rate cuts could be on the way for 2024. If that’s the case, and if a recession is avoided, prices may start rising once again.
Regional prices down, but hold on a moment…
Home prices across the regions fell-0.3% in February, which was more than the fall across all capital citiescombinedof-0.1%.However, this weaker result reflects the monthly rise in Sydney’s values rather than a larger fall in regional market values. Everywhere but the broader regions in NSW recorded a monthly outcome that was essentially the same or stronger, relative to city cousins.
Still ahead of pre-COVID prices
Taking everything into account, dwelling values remain higher than they were at the onset of COVID across every capital city and broad rest-of-state region, with Melbourne and Sydney having the smallest value buffer, at just +0.03% and 7.7% higher, respectively.
Regional SA and Adelaide have remained relatively resilient to value fall through the rate hiking cycle, with housing values surging through the upswing.
Inventory volumes remain low relative to previous years, however.