Overview
- National dwelling values rose by 0.6% in July, with the rate of growth holding firm relative to the prior two months.
- That marks the sixth straight month of gains, with the positive inflection aligning with the first rate cut in February.
- Every capital city recorded a rise in dwelling values through the month.
National dwelling values rose by 0.6% in July, with the rate of growth holding firm relative to the prior two months, according to Cotality’s latest Home Value Index.
That marks the sixth straight month of gains, with the positive inflection aligning with the first rate cut in February.
“At the national level, the pace of growth in housing values is no longer accelerating,” said Cotality’s research director, Tim Lawless. “Rather, we have seen growth rates holding a little above half a percent from month to month since May as the opposing influence of low supply, falling interest rates and rising confidence run up against affordability constraints and lingering uncertainty.”
Every capital city recorded a rise in dwelling values through the month, led by Darwin with a solid 2.2% rise, followed by Perth, up 0.9%. At the softer end of the growth tables are Hobart (+0.1%), Melbourne (+0.4%) and the ACT (+0.5%).
“While the Darwin trend doesn’t have much influence on the headline numbers, the Top End capital has moved into a solid upswing, posting a 9.7% gain through the first seven months of the year,” Mr Lawless said.
“The mid-sized capitals are also once again standing out, especially Perth, where the monthly pace of gains has accelerated to the fastest rate of growth since September last year.”
The positive trend in housing values is supported by persistently low inventory levels, with national listings tracking -19% below the previous five-year average for this time of the year. At the same time, Cotality’s estimate of annual sales is tracking about 1.9% above the previous five-year average. The imbalance between available supply and demonstrated demand has supported auction clearance rates, which have been tracking slightly above the decade average since mid-May.
Although the monthly growth trend looks to have found a sweet spot around 0.6%, the rolling quarterly change shows a clear upswing. The 1.8% rise in the national index over the three months ending July was the strongest outcome since the three months ending June last year (+2.0%).
The rate of growth in house values is once again outpacing gains across the unit sector. The past three months have seen national house values rise by 1.9%, adding approximately $16,700 to the median value. In comparison, unit values are up a smaller 1.4% or roughly $9,700 on the median value. This may be because more expensive markets tend to have higher interest rate sensitivity, with higher-income households seeing a bigger boost to borrowing capacity. This usually leads to house values outperforming units during housing market upswings.
The difference between the national median house and unit value is at a record high, with a 32.3% difference between the two broad housing types, or approximately $223,000 in dollar terms.
Mr Lawless noted: “Such a wide difference comes amid ongoing affordability constraints and a lack of newly built multi-unit housing supply, which seems counter-intuitive. Clearly, demand preferences are still weighted towards detached housing options despite the substantially lower price points available across the unit sector.”
The combined regional markets (1.7%) are no longer outperforming, with the rolling quarterly gain once again favouring the combined capitals (1.8%). The stronger capital city trend comes after nine months where the quarterly trend rate of growth has been stronger across regional Australia.
The stronger capital city trend isn’t evident everywhere, with regional markets in Vic (1.4%), Qld (2.5%) and SA (2.0%) continuing to outperform their capital city counterparts (1.2%, 2.3% and 1.5% respectively).
