Breakdown of Corelogic HVI Report - July data

While national home values continue to rise, three capital cities have seen declines over the past three months. Melbourne experienced a -0.9% drop.

National Trends:

• July Growth: National home values increased by 0.5% in July, marking the 18th consecutive month of growth.

• Recovery: After a -7.5% decline from May 2022 to January 2023, the national Home Value Index (HVI) has surged 13.5%, consistently reaching new highs since November 2023.

Diverse Market Conditions: Despite the positive headline growth rate, momentum is slowing, with diverse conditions emerging across different regions. Three capital cities recorded declines in values over the past three months:

• Melbourne: -0.9%

• Hobart: -0.8%

• Darwin: -0.3%

In Sydney, the quarterly growth pace slowed significantly to 1.1%, a sharp contrast to the 5.0% gain observed last year. National home values rose by 1.7% over the past three months, compared to a 3.2% increase during the same period last year.

Mid-Sized Capitals Defy the Trend: Mid-sized capitals continue to buck the slowing trend:

• Perth: 6.2% quarterly growth

• Adelaide: 5.0% growth, the fastest since May 2022

• Brisbane: 3.8% growth, down from 4.7% last year

Supply and Demand Dynamics: According to DMC Property Advisory’s research director, available supply significantly impacts housing growth trends. For example, home listings in Brisbane, Adelaide, and Perth are more than 30% below average for this time of year, while markets like Melbourne and Hobart are experiencing above-average advertised supply levels.

Affordability and Borrowing Capacity: Affordability factors and borrowing capacity constraints are pushing demand towards lower price points. Lower quartile values are leading growth across every capital city except Darwin and Canberra. Nationally, lower quartile dwelling values rose 3.3% over the past three months, compared to a 0.8% increase in upper quartile values.

Regional Housing Market: Regional housing values are lagging behind the capitals, with a 1.3% quarterly rise compared to a 1.8% gain in the capitals. Regional Western Australia (4.7%), South Australia (3.2%), and Queensland (2.8%) led the quarterly change, while regional Victoria saw a -1.4% decline.

Unit vs. House Values: Units are now rising faster than houses in most capitals, except Darwin and the ACT. The median house value in most cities is at least 1.5 times higher than the median unit value, driving increased demand for units due to affordability and borrowing capacity constraints.

Rental Market Trends: DMC Property Advisory’s rental index rose only 0.1% in July, the smallest increase since August 2020. Sydney, Brisbane, and Hobart experienced a slight decline in rents. The slowdown in rental growth, especially in the unit sector, aligns with a peak in net overseas migration in Q1 2023. Despite slower growth, Sydney unit rents rose by 6.6% over the past 12 months, more than double the pre-COVID decade average of 2.7%.

Investment Trends: Investment demand is on the rise, with investor loans up 24.8% year-over-year and lending to investors up 29.5%. Western Australia has seen a significant 53% increase in investor lending, reflecting the state’s strong capital growth and higher yields.

Housing Sector Outlook: The housing sector outlook remains complex. Constraints on new housing supply are expected to support prices, but downside risks are increasing.

Affordability challenges are growing, with the national dwelling value to income ratio reaching 7.7 in March, approaching record highs. The portion of household income required to service a new mortgage is also at record levels.

Stay informed with DMC Property Advisory for the latest market insights and trends.

For detailed data and analysis, refer to the CoreLogic Home Value Index (HVI) Report.