CoreLogic says the momentum in Australia’s housing downturn had been easing since September 2022, with value falls virtually flat lining in February. 

CoreLogic Research Director Tim Lawless said Sydney led the change as housing values recorded their first month-on-month rise of 0.1% since January last year. 

The positive momentum carried through the first half of March, with CoreLogic’s Daily Home Value Index up 0.3% across the five largest capitals through the month-to-date. 

Lawless said the return to a more positive trend in housing values had occurred alongside a persistently lower than normal flow of new listings coming on the market. 

Capital city listings over the past four weeks were 19.9% below the previous five-year average for this time of the year. 

Such low advertised supply was likely to be a central factor keeping a floor under housing prices despite a clear drop in demand. 

At the same time, there has been a rise in auction clearance rates back to around the decade average. 

There has also been a surge in permanent and long-term migrants that could be another factor supporting the stronger market conditions. 

While most of the housing demand from overseas migration was likely to flow into the rental market, Lawless said there may be a higher-than-normal portion of long-term or permanent migrants choosing to buy rather than rent. 

That said, the housing market was still facing some considerable downside risk, with Lawless noting that it was still too early to call a bottom of the cycle. 

Lawless said interest rates may rise further from here, as well as the fact that we were yet to see the full impact on households from the aggressive rate hiking cycle to date. 

Additionally, economic conditions were set to weaken through the middle of the year, as household savings buffers were being depleted and labour markets were likely to loosen further. 

Lawless said one of the key metrics to watch was the flow of new listings coming on the market.   

“Any sign of a larger than normal level of freshly advertised stock could signal that prospective vendors aren’t willing or able to wait out the downturn any longer,” he said.  

“A rise in advertised supply to above average levels could be a signal this recent trend of growth has run out of steam. 

“Given the uncertainty ahead of us, the next few months will be critical to understand whether the housing market is indeed moving through an inflection point or if it is simply the eye of the storm.”