Australian home values hit a new high in November, marking a V-shaped return to form

• Australian home values return to form in November, hitting a new peak.
• Multi-speed conditions, with new records reached in some capitals, while others lag.
• Housing values may trend downwards again in the coming future.

Australia’s home values have recovered from the recent slump, surging past the previous high to hit a new peak, according to CoreLogic’s latest Home Value Index (HVI) report.

Prices soar after momentary interlude

Since reaching April 2022’s peak, national home values plummeted by 7.5%, bottoming out on 29 January 2023. After stabilising, the national HVI grew by 8.1%, pushing the market to a historic high on 22 November 2023.

Change in national home values from April 2022 peak

CoreLogic’s research director, Tim Lawless, noted that while it took about nine months for the national HVI to tumble from 2022’s record high to its recent low, it took roughly around the same time to snap back from its flash decline.

“The V-shaped recovery may seem counterintuitive, given high-interest rates, deeply pessimistic levels of consumer sentiment and high cost of living pressures, however, the recovery can be explained by an imbalance between supply and demand,” he said.

“From a supply perspective, advertised stock levels have held remarkably low through 2023. Although inventory levels are now rebalancing as vendor activity picks up, listings remain 16.6% below the previous five-year average nationally.

“At the same time, demonstrated demand, based on the volume of home sales, is trending roughly in line with the five-year average.”

National HVI over the past five years

Multi-speed market

Though the national index has secured a new peak, this figure obscures the mounting divide in housing market conditions across the capitals. For instance, Perth, Adelaide, and Brisbane were at record highs, together with their regional equivalents, regional Western Australia (WA), regional South Australia (SA), and regional Queensland.

On the other hand, values in Hobart have stayed 11.8% under their record highs, while home values in regional Victoria remained 7% below their peak.

Major regions: change in dwelling values November 22nd 2023

Source: CoreLogic

With housing values marching upward across most areas, Lawless predicted that more regions would reach record-high dwelling values.

“While this is great news for homeowners, for those looking to buy, affordability pressures are becoming more pressing amid rising values, high interest rates and worsening serviceability challenges,” he said.

The road ahead

In better news for the nation’s first home buyers and renters, Lawless reported there was evidence that housing value growth was slowing.

“We are already seeing evidence that housing value growth is slowing. For example, Sydney home values were previously rising at 1.5% month-on-month in May, with growth slowing to 0.8% in October,” Lawless told The Property Tribune.

“Our daily index series is indicating a further slowdown in value growth is underway through November, with the rolling four-week change currently tracking at half the October rate, at 0.4%.

“Similarly, the pace of gains across the Melbourne market has slowed from a monthly rate of 1.1% in May to 0.5% in October, with a further deceleration through November to date.”

While the research director’s comments may provide some respite to eastern state dwellers, the future remains bleak for those living in other capitals.

“It’s likely we will see further evidence of multi-speed conditions emerging across the housing market. At the moment, Perth, Brisbane and (to a lesser extent) Adelaide stand out with persistently low stock levels and a higher, more resilient pace of capital gains.

“These mid-sized markets have lower advertised stock levels, and demand is holding firm and affordability constraints aren’t as pressing as the larger capitals.

“There is growing risk we could see housing values once again trending lower in some cities as demand and supply become more balanced amid rising vendor activity and less demand as migration peaks, sentiment remains low and borrowing capacity is impacted by high-interest rates.

“Other factors should help to keep a floor under housing prices, including a burgeoning undersupply of newly built housing, above average migration and tight rental conditions.”