Regions and smaller cities drive growth
CoreLogic’s national Home Value Index was up 0.7 per cent in March, a subtle increase on the 0.6 per cent lift recorded in February.
The uptick in the monthly rate of growth was primarily driven by stronger conditions in Brisbane, Adelaide, Perth and the ACT, along with several regional areas, offsetting a slip in values across Sydney and Melbourne.
The first quarter of the year has seen Australian dwelling values rise by 2.4 per cent, adding approximately $17,000 to the value of an Australian dwelling.
A year ago, values were rising at more than double the current pace, up 5.8 per cent over the three months to March 2021 before the quarterly rate of growth peaked at 7.0 per cent over the three months ending May 2021.
Sydney’s growth rate is showing the most significant slowdown, falling from a peak of 9.3 per cent in the three months to May 2021, to 0.3 per cent in the first quarter of 2022.
Melbourne’s housing market has seen the quarterly rate of growth slow from 5.8 per cent in April last year to just 0.1 per cent over the past three months.
CoreLogic’s research director, Tim Lawless, said that while the monthly rate of growth was up among some cities and regions, there is mounting evidence that housing growth rates are losing momentum.
“Virtually every capital city and major rest-of-state region has moved through a peak in the trend rate of growth some time last year or earlier this year,” he said.
“The sharpest slowdown has been in Sydney, where housing prices are the most unaffordable, advertised supply is trending higher and sales activity is down over the year.
“There are a few exceptions to the slowdown, with regional South Australia recording a new cyclical high over the March quarter and some momentum is returning to the Perth market where the rate of growth is once again trending higher since WA re-opened its borders.”
With the softening in market conditions, the national annual growth rate (18.2 per cent) has fallen below the 20 per cent mark for the first time since August last year, after reaching a cyclical high of 22.4 per cent in January 2021.
Mr Lawless said that the annual growth trend will fall sharply in the coming months, as the strong gains recorded in early 2021 drop out of the 12-month calculation.
National housing turnover is also easing, with preliminary transaction estimates for the March quarter tracking 14.3 per cent lower than the same period in 2021, but still 12.2 per cent above the previous five-year average.
“Nationally, the volume of housing sales is coming off record highs but there is some diversity across the capital cities in these figures as well,” Mr Lawless said.
“Our estimate of sales activity through the March quarter is 39 per cent lower than a year ago in Sydney and 27 per cent lower in Melbourne, while stronger markets like Brisbane and Adelaide have recorded a rise in sales over the same period.”
Regional Australia continues to show some resilience to a slowdown with housing values across the combined regional areas rising at more than three times the pace of the combined capital cities through the March quarter.
Regional dwelling values increased 5.1 per cent in the three months to March, compared with the 1.5 per cent increase recorded across the combined capital cities.
The rolling quarterly growth rate in regional dwelling values has consistently held above the five per cent mark since February 2021.
The ABS reports that the number of people living in regional areas of Australia increased by almost 71,000 residents, while residents living in the capitals fell by approximately 26,000, mostly due to a sharp drop in Melbourne and, to a lesser extent, Sydney.