FORECASTS on the market appear to have been too pessimistic as home prices rose by 0.7% across Australia in November with Canberra overtaking Melbourne as the second most expensive city, behind perennial leader Sydney.
After a 2.1% drop in dwelling values across Australia between April and September, according to CoreLogic’s report on November house prices, country wide prices are up 0.8%.
“The national home value index is still seven tenths of a per cent below the level recorded in March, but if housing values continue to rise at the current pace we could see a recovery from the COVID downturn as early as January or February next year,” said Tim Lawless, head of research at CoreLogic.
AMP Capital’s Shane Oliver attributes the relative strength of the market to the release of pent-up demand that accumulated during the pandemic, government incentives, easing of lending standards, record low mortgage rates and the increased interest in sea changes in treechanges from city dwellers.
Dwelling prices in Sydney rose by 0.4% to a median value of $860,967, compared to a 0.1% increase in October and a 2.9% fall between April and September. While in Melbourne prices rose by 0.7%, to a median value of $672,172, after an October low and a 5.6% fall in March.
“The recovery in Melbourne, where home values remain 5% below their recent peak, will take longer,” added Lawless.
In Sydney and Melbourne, home values look closest to their early 2017 levels, but look likely to surpass their pre-pandemic levels by early 2021.
The nation’s capital, Canberra, had a monthly increase of 1.9% to $672,866, an annual increase of 12.1%, and is now the second most expensive city behind Sydney.
In Perth, dwelling prices are up 1.1% to a median value of $463,846, with home values mirroring closely to mid-2006 levels. While in Darwin, dwelling prices went up 1.9% to a median value of $405,857, with values similar to 2007 levels.
Over the month, Brisbane, Adelaide and Hobart saw home values recording new highs. Brisbane saw an increase of 0.6% to $515,267, which is an annual increase of median value of 7.2%. Adelaide saw increases of 1.3% to $459,896, an annual increase of 9.4%. Hobart had an increase of 1.4% to $505,683, an annual increase of 10.9%.
Though house values have seen strong gains, driving up the capitals index over the last few months, pushing values up by 1.1% over the quarter, capital city unit values have continued to fall over the same period. Unit values in Australian Capital cities fell by 0.6% over the quarter.
“This trend towards stronger conditions in detached housing markets is evident across most of the capital cities. Relative weakness in the unit market can be attributed to factors including low investment activity, higher supply levels in some regions, and weaker rental market conditions across key inner city unit precincts,” said Lawless.
Melbourne unit values have been stronger than expected, with its market recording a smaller decline and greater recovery over recent months. Given the high supply and decline in rental conditions. This is not likely to hold however, unless overseas migration numbers return sooner than expected.
Regional areas continued to perform well nationally, with home values up by 1.4% in November, making the combined monthly growth rate double that of the capitals. Over the quarter the biggest rise was in regional Queensland which saw an increase in value of 3.2%, followed by regional NSW which saw an increase of 3.1%.