National Property Index Jump
The CoreLogic National Property Index jumped into action in November, recording its fifth straight monthly increase and largest monthly gains in over 16 years. While parts of the national market remain slow, values in Sydney, Melbourne, and Hobart continue to grow beyond expectations. The downturn that defined the Australian market at the start of the year seems like a distant memory, with some experts expecting other state capitals to join the party in 2020.
Property values in Sydney and Melbourne continue to lead the charge, with prices in November up 2.7% and 2.2% respectively compared to the month before. Melbourne was up 2.2% for the year at $666,883, with Sydney up 1.6% at $840,072. The heated Hobart market jumped a massive 2.3% over the month, followed by Canberra at 1.6%. The rest of the country was much more subdued; with Brisbane, Adelaide, and Perth all recording gains between 0.8% and 0.4% for the month. Darwin was the only state capital to experience negative growth at -1.2%, which puts annual growth in the northern capital at a worrying -10.9%.
Overall, national values were up 1.7% for the month, which is the largest monthly increase since October 2003. Combined capital city prices also recorded their biggest rise in 16 years at 2%, with combined regions up 0.5%. After five consecutive months of solid gains, quarterly results were also strong at 3.8%, 4.6%, and 1.1% respectively. On an annual basis, Australian property was up ever so slightly by 0.1% to $537,506, with the capitals up 0.4% to $622,346, and the regions down -1.2% to $380,657.
According to CoreLogic head of research Tim Lawless, multiple factors have influenced the current price surge: “The synergy of a 75 basis points rate cut from the Reserve Bank, a loosening in loan serviceability policy from APRA, and the removal of uncertainty around taxation reform following the federal election outcome are central to this recovery... Additionally, we’re seeing advertised stock levels persistently low, creating a sense of urgency in the market as buyer demand picks up."
Positive forecasts are also affecting conditions on the ground, with the housing market likely to remain buoyant despite an atmosphere of global and domestic economic uncertainty. According to Mr Lawless, "There’s also the prospect that interest rates are likely to fall further over the coming months and an improvement in housing affordability following the recent downturn are other factors supporting a lift in values.” With more growth currently recorded in premium markets, Mr Lawless also thinks that "demand is likely to ripple outwards to the more affordable areas.”
While the speed of the turnaround has caught some people by surprise, including many potential first-home buyers, current strength in the market is not likely to continue at the same rate. Despite the Treasurer's never-ending optimism, the Australian economy is in a fragile state. According to Mr Lawless, “Considering wages and household income growth remains low, economic conditions are losing momentum, and housing affordability is once again worsening... there are likely to be some headwinds in maintaining such a fast recovery."