CoreLogic Home Value Index shows growth easing in most regions as new listings rise

Research News   •   01 Aug 2023

CoreLogic’s national Home Value Index (HVI) rose 0.7% in July marking a fifth consecutive month of housing value recovery.

Since finding a floor in February, the national HVI is up 4.1%, following a -9.1% decline from record highs in April 2022.

Nationally, home values remain -5.3% below the April 2022 peak, with only Perth, Adelaide and Regional South Australia recording a new cyclical high in dwelling values through July.

While housing values are continuing to record a broad based rise, the rate of growth has lost momentum over the past two months, slowing from 1.2% in May.

CoreLogic Research Director, Tim Lawless, noted the most substantial reduction in growth has occurred in Sydney.

“After leading the upswing, the monthly pace of growth in Sydney housing values has halved from a recent high of 1.8% in May to 0.9% in July.  Sydney has also seen a significant rise in the number of fresh listings added to the market, 9.9% higher than the same time last year and 18.0% above the previous five-year average.  An increased flow of new listings provides more choice and may be working to reduce some of the urgency felt among prospective buyers,” he said.

Brisbane and Adelaide saw the monthly pace of growth accelerate in July, leading the pace of gains across the capitals with housing values up 1.4% across both cities.  Although the trend in new listings has risen in these cities, Mr Lawless said the number remains well below levels from a year ago and the previous five-year average.

Canberra was the only capital city to record a decline in values in July, down -0.1%, while Hobart values were unchanged.

The slowdown in value growth has mostly been driven by an easing in gains across the upper quartile of the market.  While growth in the upper quartile of the combined capitals index diminished from 1.8% in May to 0.7% in July, the lower quartile (1.0%) and broad middle of the market (0.9%) remained resilient in July, following a smaller, but more consistent rate of growth over previous months.

“Some resilience in growth across the middle and more affordable end of the market aligns with housing finance data which has shown a stronger bounce back in the value of lending to first home buyers and investors over recent months,” Mr Lawless said.

“These segments tend to be more active across the middle to lower end of the pricing range where competition to purchase a home may be more intense.

“Premium housing markets tend to lead the cycles, so the slowdown in the pace of growth could be a sign of a broader easing in the pace of growth over the coming months.”

Regional values continued to lag behind the capitals with the combined regionals index rising 0.2% in July compared with a 0.8% increase across the combined capitals index.  Every rest-of-state region recorded a smaller change in dwelling values through July relative to the capital city, reflecting milder housing demand across regional Australia as demographic patterns normalise.

The largest rise in regional housing values over the three months ending July (based on SA4 regions) has been the Gold Coast (4.0%), the South East region of Tasmania (3.1%), and the Newcastle/Lake Macquarie region (3.0%).  On the flipside, the weakest conditions over the rolling quarter were confined to areas of Regional Victoria, with Bendigo (-3.7%) recording the largest decline, followed by Shepparton (-2.3%) and the Warrnambool/South West region (-2.3%).

The flow of new listings added to the capital city housing market lifted by 3.9% over the four weeks ending July 30, bucking the usual seasonal trend where new listings would generally reduce through winter.  Most of the capitals have recorded a rise in the number of fresh listings through July, although Sydney was the only city where the flow of fresh stock to market was higher than a year ago (+9.9%).

Mr Lawless speculated there may be a few reasons why vendors are becoming more active at a time that is normally seasonally subdued.

“The flow of new listings has held at below average levels since September last year.  With total stock levels still low and selling conditions reasonably strong, it may be the case that more home owners are picking current market conditions as a good time to sell, rather than waiting until spring when stock levels might be higher, creating more competition among vendors.  Another possibility is that we are seeing the first signs of motivated selling as the rapid rate hiking cycle catches up with household balance sheets,” Mr Lawless said.

Although new listings have trended higher, overall capital city advertised stock levels remain low, tracking -18.3% below the same time last year and -23.3% below the previous five-year average.

“The fact that total stock levels are still trending lower implies demand is keeping up with the increased flow of new listings coming to market,” Mr Lawless said.

Total listings were holding below the previous five-year average across every capital city except Hobart.