Dwelling prices are now growing with a level of consistency that signals a recovery trend in full swing.
While there was a downward revision in dwelling price growth for August, revised from 0.8% to 0.7%, the story for September was still centred on growth. As it turns out, CoreLogic’s National Home Value Index (HVI) recorded an increase of 0.8% in September.
This was the eighth month in a row where dwelling prices rose. The monthly result was also indicative of accelerating price growth, even if only by a modest degree.
More importantly, the result suggests there are currently no signs that the market might be about to revert to a double-dip correction as many pundits were predicting just a few months ago.
Of course, with the Reserve Bank of Australia now firmly entrenched in wait-and-see territory as far as monetary policy, the biggest headwind for the property market has been removed from the equation - at least for the time being.
With every month the current streak of growth extends, buyers will likely grow in confidence regarding the future outlook for property prices across the nation.
And as we head into a traditionally busy period for the property market, results over the coming weeks could help maintain upwards pressure on dwelling values.
Capital Cities: Review
Adelaide recorded the strongest price growth of any market last month, with dwelling values surging 1.7% month-over-month. The result marked a significant acceleration in price growth considering the rate of growth was just 1.1% in August.
Next were Brisbane and Perth, where property prices grew by a healthy 1.3% across the course of the month.
While the result in Brisbane showed some moderation from a particularly strong August, where prices grew by 1.3%, Perth saw dwelling values accelerate from 0.9% price growth a month prior.
Growth in the nation’s largest and most active property market continues to tick along at a healthy rate. Sydney dwelling values rose by 1.0% in September, just a fraction behind the 1.1% growth recorded in August.
Melbourne continues to lag the performance of other major markets. There, prices were up just 0.4% month-over-month, which is in keeping with recent months where the second-largest market has delivered restrained growth in dwelling values.
One of the reasons behind this may be the Victorian government’s numerous tax grabs targeting the property sector, likely stifling investment demand.
Elsewhere, Canberra dwelling values rose 0.2% last month, Darwin eked out a 0.1% gain, but Hobart’s woes persisted. The southernmost capital city was again the only capital to post negative growth in dwelling values, this time -0.6%. Hobart prices are currently at a cyclical low.
Overall Market: Review
On a national basis, the market is inching closer towards retaking its historical high. In fact, since the national index bottomed out back in January, it has since risen by 6.6%. This positions the index just 1.3% below the record highs seen back in April, 2022.
While Sydney was the original catalyst for the rebound, more recently it has been the likes of Adelaide, Brisbane, and Perth where the recovery is gaining steam. These three cities delivered the highest growth rates in the September quarter at 4.3%, 3.9%, and 3.6% respectively.
The key factor behind the strong showing in these cities is the current level of advertised supply. Compared with prior five-year averages, advertised supply in these cities is sitting at around 40% versus historical levels.
Based on the current growth rates across the market, the National Home Value Index could record a new all-time high by the end of November, especially if Brisbane achieves the feat at a market level this month as expected.
More recently, dwellings priced in the lower quartile of the curve, and for Sydney and Melbourne, dwellings in the middle band of the market, are outperforming their more expensive peers. This is to be expected after a strong run in the blue-chip suburbs.
The story across the regions remains consistent in that regional markets are growing, but at a much slower pace than their corresponding capital city pairings. Demand in the regions is soft, as evidenced by a lower volume of home sales.
