Property News, Insights & Education

    Aussie home prices pick up pace, defying high-interest rates & cost-of-living pressures

    • CoreLogic’s national Home Value Index rose 0.6% in February 2024, up from 0.4% in January
    • All capital cities and regions saw prices increase, except Hobart
    • Home prices in Perth continue to grow at an impressive rate, putting on 1.8% in February alone and 18.3% over the past year
    • Perth is also the standout city for rental growth, with house rents up 13.5% in the past year and unit rents up 16.5%

    Australian home prices rose in February, according to new figures from CoreLogic, with the firm’s national Home Value Index up 0.6%.

     

    It’s the strongest monthly gain since October last year.  

     

    The median home price across the nation is now $765,762, up 8.9% in a year. 

     

    Each of the capital cities and regions recorded a lift in values over the month, except Hobart, where the market fell -0.3%.

     

    “Housing values have been more than resilient in the face of high-interest rates and cost of living pressures,” says CoreLogic’s research director, Tim Lawless.

     

    “The ongoing rise in housing values reflects a persistent imbalance between supply and demand which varies in magnitude across our cities and regions.”

     

    CoreLogic also points to more optimism about the housing market generally, with a rise in consumer sentiment, lower-than-forecast inflation and growing consensus that interest rates will be cut later this year.

    Revised_Home values_Graphs_Mar1_2024

    Perth is the standout - again

     

    Once again Perth leads the way, recording a substantially higher rate of growth than any other city or region.

     

    The WA capital rose 1.8% over the month, giving it an astonishing annual home price growth rate of 18.3%.

     

    The median home in Perth is now worth $687,004.

     

    Adelaide (+1.1% - median price $727,142), Brisbane (+0.9% - median price $805,593) and the regional areas of SA (+1.1% - median price $399,339), WA (+1.0% - median price $479,540) and Queensland (+1.0% - median price $616,576) also show “a consistently high rate of capital growth month-to-month”, according to CoreLogic.

     

    “These regions are generally benefiting from a combination of comparatively lower housing prices and positive demographic factors that continue to support housing demand,” Mr Lawless says.

     

    Sydney & Melbourne

     

    CoreLogic also sees positive signs in the country’s two largest property markets.

     

    Sydney home values increased 0.5% in February to a median value of $1,128,155.

     

    It’s the second straight month that values have gone up in the harbour city after small declines in November and December.

     

    Melbourne has also emerged from a three-month slump to record a small 0.1% gain in February. 

     

    The median home price in the Victorian capital is now $778,941.

     

    “Potentially we are seeing some early signs of a boost to housing confidence as inflation eases and expectations for a rate cut, or cuts, later this year firm up,” Mr Lawless says.

     

    This has seen a bounce back in auction clearance rates in the two cities in February.  

     

    “Auction results and (consumer) sentiment have both shown a historically strong relationship with housing trends,” according to Tim Lawless.

     

    “The rise in (auction) clearance rates from the mid 50% range late last year to the high 60% range in February points to a better fit between buyer and seller pricing expectations,” while “A rise in sentiment suggests households will have a better ability to make decisions around large financial commitments, like a property purchase.”

     

    The outlook for home values

     

    CoreLogic cautions that while the pace of gains in home prices across the country has picked up, most regions are still recording growth well below last year’s highs.

     

    For example, last May the CoreLogic national HVI index rose 1.3%, more than double the rise in February 2024. 

     

    Thirteen rounds of rate hikes from the Reserve Bank of Australia have helped to moderate price growth, but Tim Lawless says the ongoing “shortfall of housing supply relative to housing demand is continuing to place upward pressure on home values across most regions.”

     

    He notes, however, that it’s hard to see a repeat of last year’s fast paced growth in many markets in the short term, citing “affordability constraints, rising unemployment, a slowdown in the rate of household savings and a cautious lending environment.” 

     

    Rents continue to steam ahead

    Rents_Graph_Feb29_2024

    In good news for investors and bad news for tenants, CoreLogic says rental growth has started to re-accelerate in early 2024, with the monthly indicator up 0.9% in February, the highest reading since March last year. 

     

    While a pick-up in rents in the early part of the year can be a seasonal phenomenon, CoreLogic notes there has also been a pick-up in the annual growth trend for rents, with the national index up 8.5% over the 12 months to the end of February.

     

    Similar to the trend in home prices, Perth stands out among the capital cities, with a substantially faster rate of rental growth, that is showing little evidence of slowing down. 

     

    Rents for houses grew 13.5% in the 12 months to the end of February in the WA capital, with unit rents up a whopping 16.5% over the same period.