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- Additionally, for the first time in a year, growth in capital city housing values outpaced the regional markets.
- Housing market strength is being supported by a disconnect between demand and supply.
- Estimated sales activity remained elevated through March.
- The premium end of the housing market is leading the acceleration in the rate of capital gains.
- Breakdown of house price growth
CoreLogic’s national home value index recorded a 2.8% rise in March, the fastest rate of appreciation since October 1988 (3.2%).
These exceptionally strong growth conditions remain broad-based, with values rising by at least 1.4% across each of the capital cities and ‘rest-of-state’ areas over the month.
Sydney led the pack for capital gains in March, with values surging 3.7% over the month and 6.7% higher over the first quarter of the year.
“The last time Sydney housing values recorded a quarterly trend this strong was in June/July 2015.
Following this brief surge, the pace of growth rapidly slowed as limits on investor lending kicked in to slow the market.
Across the regional markets, gains were highest in NSW, where values were up 2.8% over the month.
March marked several inflection points across the market: Sydney and Melbourne have now staged a full recovery from earlier downturns.
With the acceleration in capital gains across Sydney and Melbourne, the larger capitals have started to outpace many of the smaller cities that were previously leading the charge in growth.
Sydney dwelling values are now 2.6% higher than their July 2017 peak: a remarkable recovery considering the -14.9% drop in values through to May 2019 and the further -2.9% fall throughout the COVID downturn.
Similarly, Melbourne housing values have recovered from the -11.1% fall between 2017 and 2019, and the -5.6% drop in values through the worst of the COVID-related downturn to set a new record high in March.
Additionally, for the first time in a year, growth in capital city housing values outpaced the regional markets.
CoreLogic’s combined capital cities index recorded a 2.8% lift in March compared with the 2.5% gain seen across the combined regionals index.
Housing values in regional areas are 11.4% higher over the past year, demonstrating the earlier stronger growth trend; capital city values are now 4.8% higher on an annual basis with the acceleration in growth evident in March.
In March, Victoria was the only state where regional housing values rose at a faster pace than their capital city counterparts.
Regional Victorian values were up 2.6% compared with a 2.4% rise across Melbourne.
Lower density housing has continued to outpace higher density housing for capital gains.
Nationally, house values were 3.0% higher over the month while unit values were up a more modest 1.9%.
Across the combined capitals, the quarterly growth rate for houses (6.5%) is more than double that of units (3.1%).
Despite the underperformance, unit markets have turned a corner, with Sydney recording two consecutive months of rising values, while the Melbourne unit market has seen values consistently rising since October last year, with the trend accelerating over recent months.
Housing market strength is being supported by a disconnect between demand and supply.
On the supply side, total advertised listings remained extremely low throughout March.
A count of national total listing numbers over the four weeks ending March 28 shows advertised stock levels were -25.5% below the five-year average.
The low number of listings comes as the trend in the number of newly advertised homes has risen to above-average levels.
The past four weeks have seen new listings nationally trending 8.1% higher than a year ago and 3.0% above the five-year average.
The main reason total listing numbers remain so low is that buyer demand is consistently outweighing new advertised supply.
The ratio of sales to new listings is tracking at around 1.1 implying for every new listing added to the market, 1.1 homes are sold.
Such a rapid rate of absorption is keeping overall inventory levels low and adding to a sense of FOMO amongst buyers.
The tight market conditions can also be seen in auction clearance rates, which have consistently held above 80% in March.
This is also evident in rapid selling times, and lower discounting rates for private treaty sales.
Estimated sales activity remained elevated through March.
CoreLogic estimates the number of home sales over the March quarter was 21.9% higher than a year ago.
This was led by Perth, which saw an estimated uplift in sales of 42.2%, or approximately 3,200 sales, compared to the same period in 2020.
Darwin had the highest rate of increase in home sales among the capital cities at 45.7%, though this was off a low base and amounted to 539 sales in the region.
In a further demonstration of the swing towards lower density housing options, at the end of March, the six-month trend in house sales was tracking 16.5% above the decade average, while unit sales were -0.3% lower than average.
Across the combined capitals, the upper quartile of the market recorded a 3.7% lift in values in March, while the lower quartile was up less than half this rate at 1.6%.
This trend is most evident across the three largest capitals.
In Sydney, upper quartile home values were 4.8% higher over the month compared with the 2.2% lift in values seen across the lower quartile.
Similarly in Melbourne, the upper quartile (2.8%) outpaced the lower quartile (1.6%), while Brisbane’s upper quartile index (3.1%) rose at nearly triple the rate of lower quartile values (1.1%).
Previously, it was premium value properties that were leading the downturn in these same markets.
However, more recently this trend has reversed as buyers take advantage of improving economic conditions and record low-interest rates.
Breakdown of house price growth
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