Brett Warren , National Director – Metropole Group
Australian property values have staged a remarkable comeback, hitting record highs in March, according to the latest CoreLogic’s Hedonic Home Value Index. National values rose by 0.4 per cent for the month, marking a second consecutive month of recovery after a brief decline. The growth was widespread, spanning almost all capital cities and regional areas, except for Hobart, which saw a slight dip.
Key drivers behind this turnaround include the February interest rate cut, which boosted borrowing capacity and mortgage serviceability. Improved consumer sentiment has also played a major role, giving people the confidence to re-enter the property market. This newfound positivity is evident in Sydney and Melbourne, where home values have shown consistent growth over the past two months. While Sydney’s property market is edging close to its peak, Melbourne still has ground to cover.
Regional markets continue to shine brighter than their urban counterparts, recording a 0.5 per cent increase in values compared to 0.4 per cent for the capitals. Areas like Queensland’s Townsville and Gladstone, and Western Australia’s mid-west, lead the charge with annual growth rates exceeding 20 per cent. However, the pace of growth between capital cities and regional areas is beginning to converge, signalling a shift in market dynamics.
Another notable trend is the narrowing gap between price tiers. While lower-priced properties have outperformed in recent years, premium properties are now catching up. For instance, Sydney’s upper quartile values have risen by 0.6 per cent in the past three months, compared to 0.3 per cent in the lower quartile. Previous CoreLogic research found that relatively expensive markets have historically shown stronger responses to reduced cash rate settings, especially houses in Sydney and Melbourne. The March report also shows that rental values are at record highs, despite a slowdown in annual growth to 3.8 per cent. A tight rental market, with vacancy rates at just 1.5 per cent nationally, is keeping rents elevated. Gross rental yields have climbed but remain relatively low when weighed against high mortgage rates and rising maintenance costs. According to the report, new housing supply is likely to remain constrained amid high costs, a scarcity of skilled trades and compressed profit margins. Even though population growth is easing, the cumulative undersupply of housing will take some time to address.
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