There are signs Australia's property market downturn is easing after CoreLogic’s national home value index only declined 0.14% in February.
That’s the smallest monthly fall since the Reserve Bank first started increasing interest rates in May 2022.
Furthermore, Sydney home values actually rose 0.3% over the month driven by the upper quartile, or higher-end properties, whose median price increased 0.7%.
Elsewhere, Darwin (-0.3%) was the only capital city to see a steeper fall in February than in January, while every other capital city except Hobart (-1.4%) saw housing values fall by less than 0.5% over the month.
The reason, according to CoreLogic research director Tim Lawless, is that the stabilisation in housing values over the month coincided with consistently low advertised supply levels and a rise in auction clearance rates.
As the first graph above shows, the flow of new capital city listings has fallen well below average for this time of the year as hesitant vendors hold off from putting their homes on the property market. This, in turn, has seen the total number of properties advertised for sale in the four weeks to 26 February plummet to 26.3% below the previous five-year average.
With limited stock on the market, buyers are facing more competition for properties, helping to counter the downward pressure on prices caused by rising interest rates.
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
● 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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