Cotality’s House Value Index (HVI) recorded its strongest monthly gain since May 2024 at 0.7% in August. This brings this year’s annual growth to 4.1%.
Growth momentum has been building since the February rate cut, as buyer demand is elevated by a lift in borrowing capacity, real wages growth, rising confidence and what is likely a growing sense of urgency as stock levels remain tight.
Cotality Australia’s research director, Tim Lawless, said while house sales are tracking 4% above the previous five-year average, supply levels have dipped 20% for this time of year.
“Once again, we are seeing a clear mismatch between available supply and demonstrated demand, placing upwards pressure on housing values”, he said.
Despite this, Lawless said vendors are in a strong position as we head into spring, as auction clearance rates rose to 70% in late August, the highest since February last year. Competition among sellers is also relatively mild amid low advertised stock levels.
“We are starting to see the usual start of spring upswing in new listings coming to market, but from a low base,” Lawless said.
“A pick up in the flow of stock coming to market through spring will be good news for buyers who generally have limited choice at the moment.”
Despite housing values rising across most regions, the pace of growth remains modest compared to recent upswings.
During the pandemic, the monthly change in the national index peaked at 3.1% in March 2021, and the upswing commencing in early 2023 climbed quite rapidly, reaching a 1.3% high in May 2023. Lawless said national HVI reaching these peaks would be surprising due to how stretched housing affordability has become.
“What is more likely is that home values will rise at a more sustainable pace, with demand dampened by affordability constraints, more normal rates of population growth and cautious lending policy,” he said.
“While interest rates are falling, the cash rate is still 350 basis points higher than the 0.1% low that underpinned growth in the pandemic.”
Mid-sized capital cities are still leading the growth trend, with Brisbane and Perth recording the highest monthly gains of 1.2% and 1.1% respectively.
Darwin also saw a solid 1.0% gain in August, taking values 10.8% higher through the first eight months of the year, the highest year-to-date gain across the capital cities.
“It seems that investors are willing to look through the volatile history of Darwin housing trends, with investors attracted to the low price points and high yields,” Lawless said.
“Lending to this segment has more than doubled over the past year.”
“Additionally, listings are extraordinarily low, down about 50% on the five-year average.”
