Australian home values edged 0.6% higher in April despite the Sydney and Melbourne housing markets recording their first negative quarters in almost two years.
According to CoreLogic’s national Home Value Index, Sydney housing values recorded the third consecutive month-on-month decline, down 0.2%.
Melbourne values reached -0.04% in April and have been down during three of the past five months.
CoreLogic’s Research Director Tim Lawless said the weakening state of the market had taken the rolling quarterly trend into negative territory across Sydney and Melbourne for the first time since these cities were in the midst of extended lockdowns in mid-to-late 2020.
Hobart home values also declined, sliding -0.3% in April and marking the city’s first monthly fall in 22 months.
Monthly housing values were still growing in other capital cities such as Adelaide and Brisbane, which rose 1.9% and 1.7% in April respectively.
Although monthly growth rates remained high in those markets, Lawless warned the trend rate of growth was easing in most of these areas as well.
For example, Brisbane’s quarterly home values slowed to 5.7% over the most recent three-month period, down from 8.5% during the December 2021 quarter.
Perth and Darwin have been the exceptions, where the rolling quarterly trends have gathered some steam since late last year.
Perth housing values were up 2.4% over the three months ending April compared with a recent lull through late last year when the quarterly trend fell to just 0.4%.
“A rebound in migration rates as state and international borders re-opened could partially explain the renewed exuberance, along with persistently low advertised stock levels and strong economic conditions,” Lawless said.
“While ABS internal migration data by greater capital city is currently only reported to June 2021, the data points to a vast uplift in internal migration to Perth for the year (6,468), a substantial turn-around from the previous four-year average (-3,735).”
CoreLogic said regional Australian housing markets had been somewhat insulated from the slowdown, with housing values up 1.4% in April across the combined regionals index, compared with a 0.3% gain across the combined capitals.
As the stronger months of capital gain from early 2021 fell out of the 12-month calculation, Lawless said the annual change would reduce more sharply over the coming months.
“With the RBA cash rate set to rise, potentially as early as tomorrow, we are likely to see a further loss of momentum in housing conditions over the remainder of the year and into 2023,” he said.
“Stretched housing affordability, higher fixed term mortgage rates, a rise in listing numbers across some cities and lower consumer sentiment have been weighing on housing conditions over the past year.
“As the cash rate rises, variable mortgage rates will also trend higher, reducing borrowing capacity and impacting borrower serviceability assessments.”