CoreLogic calls it: Housing values may have found their floor

We take a look at CoreLogic’s evidence for making the bottom-of-the-market call

Residz Team 3 min read

Don’t look now, but Australia’s falling house values may have found their floor.

CoreLogic’s May 2023 Home Value Index has been released with the headline: Further evidence Australia’s downturn is over.

It’s news home sellers will welcome with a cautious sigh of relief. Home buyers, on the other hand, may be disappointed the market shows signs it’s not about to plummet to murkier depths. Conversely, they could appreciate better times and potential capital gains ahead, once they’ve bought in.  

Here we take a look at CoreLogic’s evidence for making the bottom-of-the-market call.

Housing Values See Strongest Rise in Sydney

CoreLogic cites data showing housing values stabilising or rising across most areas of the country (Sydney led with an increase of 1.3% in April) as well as a number of other indicators confirming the positive shift.
CoreLogic’s Research Director, Tim Lawless says auction clearance rates are holding slightly above the long run average, sentiment has lifted, and home sales are trending around the previous five-year average.”

Supply and Demand are Still at Odds

As CoreLogic flagged in the April report, a key factor is the worsening imbalance between housing supply and demand, says CoreLogic.

Immigrants to Australia, for example, would normally look to rent - but that’s becoming trickier.  

“With [rental] vacancy rates holding around 1% in most cities, it’s reasonable to assume more people are fast tracking a purchasing decision simply because they can’t find rental accommodation,” says Mr Lawless.

Homeowners have been cautious to list their property during the downturn, keeping inventory at below average levels. This helps those sellers who do list, by giving them some leverage in the negotiations.

Rate Hiking Cycle Could Be Drawing to a Close

Home loan interest rates are another factor affecting demand. Mr Lawless says there’s a growing expectation that the rate hiking cycle is over, or nearly over, following a sharp decline in values.

“This could be contributing to a broader perception that the market has bottomed out, and for those attempting to time the market, that it is considered a good time to buy,” he said.

“As interest rates stabilise there is a good chance consumer sentiment will improve.”

Regional Values Both Up and Down

While regional values are generally stabilising or rising, regional NSW (-0.3%) and regional Victoria (-0.4%) recorded a fall in housing values over the month. However the quarterly trends in these regions indicate values are settling.

Values Still Well Down on Peak

The news of a housing values floor will come as a big relief for home sellers, but it doesn’t mean values are anywhere near their recent highs.

From the market peak Hobart has dropped -13%, Sydney fell -13.8% from the market peak to recent trough (although it recently clawed back 3%), and Brisbane fell -10.7% below its recent peak.

Meanwhile Perth has recovered all its recent declines and regional SA and regional WA also recorded new cyclical peaks.

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