Australian housing values rose 0.6% in February, however it was the lowest monthly growth rate since October last year.
CoreLogic’s national Home Value Index (HVI) showed that while housing values were generally rising, the pace of growth in the national index had trended downwards since April last year.
The February result was down from 1.1% in January and a cyclical peak of 2.8% in March 2021.
CoreLogic’s director of research Tim Lawless said every capital city and broad ‘rest of state’ region was now recording a slowing trend in value growth, albeit with significant diversity.
“Sydney and Melbourne have shown the sharpest slowdown, with Sydney (-0.1%) posting the first decline in housing values since September 2020, while Melbourne housing values (0.0%) were unchanged over the month, following similar results in December (- 0.1%) and January (+0.2%),” Lawless said.
“Conditions are easing less noticeably across the smaller capitals, especially Brisbane, Adelaide and Hobart, where housing values rose by more than 1% in February.”
Lawless said the slower growth conditions in Australian housing values went well beyond the rising expectation of interest rate hikes later this year.
“The pace of growth in housing values started to ease in April last year, when fixed-term mortgage rates began to face upwards pressure, fiscal support was expiring and housing affordability was becoming more stretched,” he said.
“With rising global uncertainty and the potential for weaker consumer sentiment amidst tighter monetary policy settings, the downside risk for housing markets has become more pronounced in recent months.”
Corelogic found that the regional markets had been somewhat insulated to slowing growth conditions, with five of the six rest-of-state regions continuing to record monthly gains in excess of 1.2%.
“Regional housing markets aren’t immune from the higher cost of debt as fixed-term mortgage rates rise,” Lawless said.
“These markets are also increasingly impacted by worsening affordability constraints as housing prices consistently outpace incomes.
“However, demographic tailwinds, low inventory levels and ongoing demand for coastal or treechange housing options are continuing to support strong upwards price pressures across regional housing markets.”