Australian home values have continued to rebound for an eighth month and are expected to reach a new high, although the pace of quarterly growth has eased.
CoreLogic’s national home value index recorded a 0.8 per cent rise rise in September, adding about $38,000 to the average dwelling since January.
Last month’s increase followed a 0.7 per cent increase in August, revised down from 0.8 per cent, taking the pace of quarterly growth to 2.2 per cent.
This was down from the June quarter’s 3.0 per cent growth as a rise in housing advertisements amid high interest rates and cost of living pressures helped take some heat out of the market.
However, CoreLogic’s report says Australia’s housing recovery remains entrenched, with national dwelling values only 1.3 per cent off record highs.
Capital cities are 7.4 per cent higher in the first nine months of the year and regional values are 2.6 per cent higher, with values likely to rise further.
Adelaide had September’s biggest monthly gains at 4.3 per cent followed by Brisbane (3.9 per cent) and Perth (3.6 per cent), while Hobart was again the only capital to post a fall in value (-0.2 per cent).
CoreLogic research director Tim Lawless said the growth rate was likely to push the national index to a new nominal high by the end of November.
“We have already seen dwelling values reach new record highs in Perth and Adelaide,” he said.
“Brisbane looks set to reach a new record high in October, with home values currently only 0.6 per cent below their previous peak.
The national index has recovered by 6.6 per cent since a trough in January, but home values remain 1.3 per cent below record highs in April last year.
Regional markets continued to lag the capitals, recording a 1.1 per cent rise in home values during the September quarter compared with the combined capital city market of 2.5 per cent.
The outlook for housing values is positive, according to CoreLogic, but there are a number of downside risks.
A big jump in new listings during the traditional spring selling season will put downward pressure on values, and households continue to do it tough amid cost of living pressures and high interest rates.
AMP economist Shane Oliver said the property market had rebounded unexpectedly as the fastest population growth since the 1950s and a limited supply of new dwellings led to a housing shortfall.
National average prices are expected to lift eight per cent this year, based on the economists’ forecasts, followed by another five per cent growth next year as interest rates start to come down.
Though uncertainty around the property outlook was still “very high”, with higher interest rates weighing on how much buyers are able to pay.
Unemployment is also expected to tick up as a consequence of interest rate hikes.
The slowing economy, higher unemployment, and the transition from cheap fixed-rate mortgages to more expensive alternatives could lead to more distressed sales.
“In fact, we have seen an unseasonal rise in new listings through July which may reflect some combination of homeowners just concluding that now is a good time to sell and/or a pick-up in distressed selling,” Dr Oliver said.
The Australian Bureau of Statistics will release its latest lending data on Tuesday, the same day as the Reserve Bank’s monthly interest rate decision.
John Crouch and Poppy Johnston
(Australian Associated Press)