Housing value declines flatten

Oksana Patron

1 March 2023

CoreLogic’s Home Value Index (HVI) recorded a reduction in the rate of decline in February, with the national index falling -0.14% and marking the smallest monthly fall since May, 2022, when rate hikes started.

The result was helped by a 0.3% rise in Sydney dwelling values. On top of that, every capital city except Hobart, which saw the housing value drop of -1.4%, recorded in February less than half of a per cent fall in housing values.

At the same time, Darwin was the only capital city which posted a steeper monthly fall this month (-0.3%), albeit from relatively flat conditions previously.

However, CoreLogic’s research director, Tim Lawless, said that the stabilisation over the month coincided with consistently low advertised supply levels and a rise in auction clearance rates.

“The past four weeks have seen the flow of new capital city listings tracking -17.0% lower than a year ago and -11.9% below the previous five-year average,” Lawless said.

“This trend towards a below average flow of new listings has been evident since September last year, coinciding with a loss of momentum in the rate of value decline.

“Whether this improving trend can be sustained is highly uncertain. While listings currently remain low, we could see housing demand dented further under higher interest rates and lower sentiment.”

Lawless warned that considering the RBA’s move to a more hawkish stance at the February board meeting, along with an expectation for a weaker economic performance and a loosening in labour markets, there was a good chance this reprieve in the housing downturn could be short-lived.

“We also have the fixed-rate cliff ahead of us; arguably the full impact of the aggressive rate hiking cycle is yet to play out,” he added.

The data also showed that the upper quartile of the combined capital city housing market drove this month’s stabilising trend, increasing by 0.1% in February.

This trend was most obvious across Sydney’s upper quartile, which recorded a 0.7% rise in values over the month, compared with a -0.2% fall in values across the lower quartile of the Sydney market.

Also, regional dwelling values were down -0.3% in February compared with a -0.1% fall across the combined capital cities. However, the weaker regional result relative to the combined capitals was mostly a factor of the monthly rise in Sydney housing values rather than a larger fall in regional market values.

All in all, dwelling values were expected to remain higher than they were at the onset of COVID across every capital city and broad rest-of-state region, with Melbourne now having the smallest value buffer, with housing values virtually equal to March 2020 levels (currently sitting just +0.03% higher), followed by Sydney, where dwelling values remain 7.7% higher.

At the other end of the spectrum is Regional SA (47.6%) and Adelaide (41.4%), where housing values surged through the upswing and have remained relatively resilient to value falls through the rate hiking cycle to-date.