Australian home values rise 1.9% during May quarter
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The news: Australian home values rose 0.8% during May, the largest monthly gain since October 2023 and the 16th consecutive month of growth.
The numbers: CoreLogic’s Home Value Index (HVI) tracks home price growth across the national market. The index is up 1.9% overall for the quarter.
Home prices boomed in mid-sized capitals, increasing 2% in Perth, 1.8% in Adelaide, and 1.4% in Brisbane. The gains are equivalent to at least a $12,000 month-to-month gain in dwelling value for each city.
Brisbane broke through to second-highest median house price nationally for the first time since 1997, with a median of $937,479 slightly edging Melbourne’s median by $190. The city has now overtaken Canberra as the second-most expensive capital city. Brisbane home prices have grown five times the rate (59.8%) of Melbourne’s (11.2%) since the onset of the pandemic, carving away the 37% premium in home prices Melbourne held over Brisbane in March 2020.
Sydney (0.6%) has recovered from growth rates that bottomed-out this January following a 12.4% slide from the January 2022 peak. Darwin (-0.3%) and Hobart (-0.5%) were the only cities that declined. Corelogic also reported the slowest growth in the national rental market (0.7%) since last December.
CoreLogic attributed the growth in mid-size capitals to major supply shortages, with properties for sale in Perth and Adelaide 40% and 34% below their respective five-year averages.
Capital city listings are also in short supply at 16% below their five-year average and 2% below their standing at this time last year. CoreLogic reported that demonstrated demand is high, at 16% above the five-year average.
The largest gains across capitals was in the lower quartile of home value, with a 13.4% gain compared to the 6.7% increase in upper-quartile prices.
The context: The continuous strong performance of Australian home values appears to show insulation from post-Covid economic conditions. Increased housing prices since Covid contradict the Reserve Bank's rate hikes, now held steady at 4.35% since November 2023.
The upward pressure on the HVI bears no relief from Australia’s cost of living crisis, despite a slight easing in rental growth. Corelogic noted that a supply-side solution is not near at hand, with new dwelling approvals dipping in April to 23.5% below the decade average, and 44% below for the multi-unit sector.
Last month, the Labor government announced a $11.3 billion budget housing package to fight homelessness, alongside an additional $25 billion in housing spending.
What they said: Corelogic research director Tim Lawless said: “It’s this disconnect between supply and demand that is trumping the downside pressures from interest rates, high inflation and low sentiment".
The source: CoreLogic media release
