Australian home prices rose 0.6% in March due to low advertised stock levels, extremely tight rental conditions and additional demand from overseas migration.
New CoreLogic research found that dwelling values were higher across the four largest capital cities and most of the broad ‘rest-of-state’ regions, led by a 1.4% gain in Sydney.
“Although interest rates are high and there is an expectation the economy will slow through the year, it’s clear other factors are now placing upwards pressure on home prices,” CoreLogic’s Research Director Tim Lawless said.
According to CoreLogic, advertised supply has been below average since September last year, with capital city listing numbers ending March almost -20% below the previous five-year average.
Purchasing activity has also fallen but not as much as available supply, with capital city sales activity estimated to be roughly -7% below the previous five-year average through the March quarter.
“With rental markets this tight, it’s likely we are seeing some spillover from renting into purchasing, although, with mortgage rates so high, not everyone who wants to buy will be able to qualify for a loan,” Lawless said.
“Similarly, with net overseas migration at record levels and rising, there is a chance more permanent or long-term migrants who can afford to, will skip the rental phase and fast track a home purchase simply because they can’t find rental accommodation.”
The lift in housing values was most evident across the upper quartile of Sydney’s housing market. House values within the most expensive quarter of Sydney’s market were up 2.0% in March and the upper quartile of the Sydney unit market was 1.4% higher over the month.
However, housing values weren’t rising everywhere, with Hobart home values falling 0.9% over the month in what was the largest drop in home values among the capital cities.
Canberra (-0.5%), Darwin (-0.4%) and Adelaide (-0.1%) also recorded a decline in values over the month.