Australian housing values increased 1.1% in June, marking the fourth month of recovery despite continued higher interest rates.
New CoreLogic research showed that the pace of growth decelerated slightly from the 1.2% gain recorded in May.
Since finding a floor in February, housing values have gained 3.4%, however the market remained 6% below peak levels recorded in April 2022.
That was the equivalent of the median dwelling value still being -$45,771 below a peak of $768,777.
Every capital city except Hobart (-0.3%) saw dwelling values rise in June.
“Sydney home values increased another 1.7% in June, taking the cumulative recovery since the January trough to 6.7%. In dollar terms, Sydney’s median housing values are rising by roughly $4,262 a week,” CoreLogic’s research director Tim Lawless said.
A lack of available supply continues to be the main factor keeping upwards pressure on housing values, Lawless said.
“Through June, the flow of new capital city listings was nearly -10% below the previous five-year average and total inventory levels are more than a quarter below average. Simultaneously, our June quarter estimate of capital city sales has increased to be 2.1% above the previous five-year average.”
Although housing values continued to record a broad-based upswing, the pace of growth across most capitals eased in June.
“A slowdown in the pace of capital gains could be a reflection of a change in sentiment as interest rate expectations revise higher,” Lawless said.
“Higher interest rates and lower sentiment will likely weigh on the number of active home buyers, helping to rebalance the disconnect between demand and supply.”
Regional housing values have also trended higher, albeit at a slower pace relative to the capitals.
Regional areas also recorded a fourth consecutive month of growth, taking housing values 1.2% higher than the recent low in February.
Lawless notes the softer growth trend across regional areas of the country align with recent shifts in demographic factors.
“After regional population growth boomed through the worst of the pandemic, internal migration trends have normalised over the past year, resulting in less housing demand across regional markets. Additionally, housing demand from overseas migration is skewed towards the capital cities rather than the regions.”
Regional Victoria is the only rest of state market where quarterly housing value trends remained negative, down 0.4% in June to be 1.3% lower over the quarter.
“The weaker conditions across regional parts of the state may be related to a normalisation in migration flows as more regional residents move to the city, along with a substantial narrowing of the affordability gap between regional Victoria and Melbourne through the recent upswing,” Lawless said.