The latest housing market results present an early sign that lower mortgage rates and improved sentiment are already having a flow-on effect for housing market conditions.
Last month, CoreLogic’s national housing market index moved closer to leveling out with values down 0.2% over the month, the smallest month-on-month decline in the national series since March 2018.
The subtle rate of decline was heavily influenced by trends across Sydney and Melbourne where the pace of falling home values has been consistently reducing over the year to May, before posting a subtle rise in June.
CoreLogic has released their newest housing market update for July 2019.
Sydney values were 1/10th of a percent higher and Melbourne values were 1 fifth of a percent higher.
This was the first positive month-on-month movement in these cities since their respective market peaks in 2017.
The only other regions to record a rise in housing values over the month were Hobart with an increase of 0.2%, as well as the regional areas of South Australia where values rose 0.1% and Northen Territory where values increased +0.2%.
Importantly, the improving conditions through to mid-May were largely ‘organic’, pre-dating the positive boost in sentiment following the federal election and interest rate cuts in June and July.
No doubt the cut to interest rates, as well as the confidence boost following the federal election outcome are factors that have supported the improving trend.
On a quarterly basis, every capital city housing market has recorded a drop in value, highlighting the broad geographic scope of this housing market downturn.
The largest falls over the past three months were recorded in Darwin (-3.6%) and Perth (-2.1%) where the weaker trend has persisted since mid-2014.
Adelaide recorded the smallest decline amongst the capitals over the quarter, with values down 0.4%.
In another sign of stabilising conditions, settled sales activity appears to be finding a floor, albeit well below the decade average.
Based on estimates of settled sales, the trend towards fewer sales is flattening, with settled sales activity over the June quarter roughly level with the trough recorded over the past two market corrections.
Auction clearance rates have also been on an upwards trajectory, reaching the low to mid 60% range across the combined capitals over the second half of June, implying a better fit between buyer and seller pricing expectations.
Clearance rates have shown a material improvement over the year to date, but remain well below the levels associated with strong price growth.
Although clearance rates have lifted, it is important to note that auction volumes are substantially lower than they have been over recent years.
Importantly, auction results are highly correlated with conditions in Sydney and Melbourne, but provide less insight into the smaller capital city market dynamic where the auction is a much smaller component of market activity.
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