The chic Double Bay cafes in Sydney’s most famous suburb for looking and feeling like a prat will undoubtedly be riddled with estate agents this morning, celebrating the return of the city’s average property price to back above the $1 million mark.

There’s little rhyme or reason in what Aussie property wants to do, but what the hell, let the champagne pop and the Backstreet Boys sing about being back, alright.

For first time in 10 months – in the face of all sorts (like) inflation, bank runs, common sense and ever rising interest rates – Aussie property prices have risen.

And they’ve risen nationally, according to CoreLogic’s shiny new monthly Home Value Index.

The rise in the median value of properties sold across Australia rise by a fairly punchy 0.6% last month, snapping a hollow, oft desperate 10-month record streak of declines.

I guess the signs were there. I didn’t see them, but that’s why they don’t pay me the big money.

February prices were just about breaking even, down a smidge at -0.1%, so the first month-on-month rise since April 2022 comes on the back of  dwelling values rising across Australia’s most populous capital cities as well as across a large swathe of the ‘rest-of-state’ regions.

Sydney, once again home to the million dollar home, led by a 1.4% surge.

 

Back baby: CoreLogic’s Home Value Index for March

Via CoreLogic

CCoreLogic’s rule-breaking director of research Tim Lawless, says the turn around would’ve been hors de question a few months ago, but that the property data firm had an inkling someting fancy was in the post.

Mt Lawless reckons a combination of extremely tight rental conditions and additional demand from overseas migration has helped overcome the rate terrors of the last year.

“With rental markets this tight, it’s likely we are seeing some spillover from renting into purchasing.

“Although,” he adds, “with mortgage rates so high, not everyone who wants to buy will be able to qualify for a loan.”

And now with net overseas migration suddenly back at record levels – and still rising – Tim believes the swelling market might just say bugger this for a joke when it comes to the strangulated rental market.

“There is a chance more permanent or long-term migrants who can afford to, will skip the rental phase and fast track a home purchase simply because they can’t find rental accommodation.”

The Double Bay effect

According to the new data for march, it looks pretty clear that the driving force for the lift in housing values is best evidenced across ‘the upper quartile of Sydney’s housing’ market.

House values within the most expensive quarter of Sydney’s market were up a flat chat 2% last month and the upper quartile of the Sydney unit market was 1.4% higher over the same time

“Sydney upper quartile house values fell by -17.4% from their peak in January 2022 to a recent low in January 2023, the largest drop from the market peak of any capital city market segment. We may be seeing some opportunistic buyers coming back into the market where prices have fallen the most,” Mr Lawless said.

“Although interest rates are high and there is an expectation the economy will slow through the year, it’s clear other factors are now placing upwards pressure on home prices,” Mr Lawless said.

“Advertised supply has been below average since September last year, with capital city listing numbers ending March almost -20% below the previous five-year average. Purchasing activity has also fallen but not as much as available supply; capital city sales activity was estimated to be roughly -7% below the previous five-year average through the March quarter.

Regions toughen up

Regional housing markets have mostly shown firmer housing conditions as well, with the combined regionals index rising 0.2% over the month. Housing values across Regional WA and Regional SA remain at cyclical highs despite 10 rate hikes. SA’s Fleurieu-Kangaroo Island SA3 sub-region led capital gains over the month with a 2.6% rise in dwelling values followed by Dubbo, NSW (2.5%), Wellington, Victoria (2.4%) and Mid West, WA (2.1%).

“The best performing regional markets are quite different to what we were seeing through the recent growth cycle,” Mr Lawless said.

“In today’s market it is mainly rural areas that are seeing the strongest increases, rather than the commutable coastal and lifestyle markets that were booming through the upswing. However, we are seeing some subtle growth return to regions within commuting distance of the major capitals, after many recorded a sharp drop in values.”

Another Rassie for Tassie

But housing values aren’t rising everywhere.

Hobart recorded the largest drop in home values among the capital cities, down -0.9% over the month. Ouch.

Housing values across the capital of the Apple Isle have fallen -12.9% since peaking in May last year. Sadly for supporters of that small but freakish island, it’s now overtakenSydney as the home of the nation’s largest cumulative fall from earlier peaks among all the capital cities.

However, chin up – the pace of decline has been easing across Hobart over the past three months.

Canberra (-0.5%), Darwin (-0.4%) and Adelaide (-0.1%) also recorded a decline in values over the month, as did Regional Victoria (-0.1%) and Regional Tasmania (-0.7%).