Following five months of consistent declines in residential property values, CoreLogic’s national home value index moved back into positive month-on-month growth through October, posting a 0.4% rise. The lift in home values was broad-based, with every capital city apart from Melbourne posting a rise in values over the month.
Over the month dwelling values increased by more than 1% in each of the smallest four capital cities with Brisbane, Adelaide, Hobart, and Canberra housing values reaching new record highs.
Although values were lower across Melbourne through October, the trend rate of decline has been easing since mid-September. With a drop of 0.2%, this was the smallest month on month drop in values since the COVID-19 related downturn commenced in April.
Since the announcement that private home inspections were once again permitted across Melbourne, new property listings have surged, clearance rates have lifted and buyer activity is recovering. Based on this recent trend in housing values and activity, it seems likely we will see Melbourne follow the other capital cities towards recovery over the coming month.
According to CoreLogic’s Head of Research, Tim Lawless, the October results show early evidence of a divergence between house and unit market performance. “The rise in capital city housing values over the month was entirely attributable to a 0.4% lift in house values which offset the 0.2% fall in unit values. Through the COVID period so far, unit values have actually shown a smaller decline in values than houses, but this is likely to change.”
“Almost two-thirds of Australian units are rented, and rental conditions have weakened, especially in the key inner-city precincts of Melbourne and Sydney. These areas have a higher concentration of unit stock, and historic exposure to demand from overseas migration. Low levels of investment activity, relatively high supply of unit stock in inner-cities, and international border closures are key factors that imply units will underperform relative to houses over the medium term” he said.
Regional housing markets continued to outperform the capital cities. Broadly, CoreLogic’s combined regionals index has held relatively firm through the worst of the COVID-related downturn. According to Mr. Lawless, “the past two months have reversed the previous mild falls across the combined regional areas. In the seven months since March, regional dwelling values are up 1.7% while values across the combined capitals index have fallen by 2.3%.”
“The newfound popularity of working from home is only one factor helping to support regional home prices. More affordable price points, lower densities, and lifestyle factors are also under-pinning the relative strength across many regional areas of the country,” Mr. Lawless added.