There are clear signs that Australia’s property market downturn is beginning to ease, with CoreLogic’s national home value index showing only a 0.14% decline in February. This marks the smallest monthly fall since the Reserve Bank of Australia began raising interest rates back in May 2022.
A standout performer in the property market was Sydney, where home values actually rose by 0.3% over the month. This growth was largely driven by the upper quartile, or higher-end properties, which saw a median price increase of 0.7%.
Across other capital cities, Darwin (-0.3%) was the only location to record a steeper decline in February than in January. Every other capital city, except Hobart (-1.4%), saw their housing values fall by less than 0.5% over the month — indicating a broad trend toward market stabilisation.
CoreLogic’s research director, Tim Lawless, attributed this easing in the property market downturn to consistently low advertised supply levels and a noticeable rise in auction clearance rates. These factors have helped balance demand and supply, providing some support to property values and reducing the pace of declines seen in previous months.
As the first graph above shows, the flow of new capital city listings has dropped well below average for this time of year, as hesitant vendors delay putting their homes on the property market. This cautious approach has led to a significant fall in the total number of properties advertised for sale, with listings in the four weeks to 26 February sitting 26.3% below the previous five-year average.
With limited stock available on the property market, buyers are facing increased competition for properties. This heightened demand is helping to counteract the downward pressure on prices that rising interest rates would typically cause, keeping property values more stable than expected.
Auction clearance rates bounce back
February also saw a rebound in auction clearance rates, with the capital city weighted
average reaching the high 60% range through the second half of the month and Sydney clearance rates rebounding to above 70% in the week ending February 19, for the first time in a year.
A high auction clearance rate suggests strong buyer demand, which could indicate that the property market is strengthening.
Is this a turning point?
Mr Lawless cautioned that this reprieve in the housing downturn could be short-lived due to economic uncertainty.
However, early signs look good, with the positive momentum carrying through the first half of
March with:
● Sydney housing values 0.5% higher over the first 15 days of the month
● Melbourne and Perth 0.2% higher
● Brisbane housing values flat (0.0%)
Once again, this positive trend has correlated with low supply with just 8,721 new listings added to the market between March 11 and March 19, down 27.3% when compared to the same time last year, and 21.3% below the previous five-year average.
There are other green shoots too. For one thing, we’re likely at or close to the top of interest rates, with the Reserve Bank of
Australia recently signalling that a pause in the tightening cycle was imminent.
For another, Australia’s population is, once again, growing strongly, with the country seeing an increase of 418,500 people (1.6%) over the year to September 2022, according to the latest data from the Australian Bureau of Statistics.
A growing population needs housing, which should support the property market’s recovery.
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