After five months of decline in residential values, numbers from CoreLogic show that the national home value index is seeing an uplift of 0.4 per cent, with every capital city (apart from Melbourne) posting a bounce back in value over the month.
This new positivity and price lift signifies a return of confidence to the market, with increased auction volumes across Australia returning the highest preliminary clearance rates since March.
In this update, we will cover:
- The increase in auction volumes and clearance rates across major cities
- Consumer confidence returns in conjunction with the Reserve Bank of Australia’s historic low interest rate decision
- Regional housing markets continuing to outperform capital cities
- Market activity on the rise again, but listing volume remains at record lows
Entering into recovery mode...
Following months of declines in residential property values, CoreLogic’s national home value index sprung back to life in October, showing positive month-on-month growth, the first increase since April.
Brisbane, Adelaide, Hobart and Canberra all hit new record highs in home values, while Melbourne saw the smallest recorded drop in price since April. Eased restrictions in Melbourne have since resulted in a surge in new property listings, with trends showing that we will likely see the city follow its capital city counterparts to recovery over the coming month.
Across the states this week...
This week, there were 1,757 homes taken to auction across the combined capital cities, up from 1,427 over the previous week. Of the 1,433 results collected, 77 per cent were successful - resulting in the highest preliminary clearance rate since March.
Positivity and price lifts
According to CoreLogic’s Head of Research, Tim Lawless, the lift in home values coincides with a range of other indicators that have also improved over the recent months.
Consumer confidence has consistently improved since the virus curve has once again flattened and Australians respond positively to measures announced in the federal budget. In October we saw an 11.9% surge in the Westpac-Melbourne Institute consumer sentiment index, rising clearance rates and an increase in valuation for purchase orders. Alongside this we are seeing persistently low advertised stock, which has supported price growth.”
This rise in sentiment was already in the air, ahead of the Reserve Bank’s historic decision on Melbourne Cup day to cut the official cash rate to 0.1 per cent, after already sitting at a record low of 0.25 per cent in March.
Eliza Owen, Head of Australian Research at CoreLogic said:
What we should keep in mind is that negative economic shocks don’t necessarily always affect the housing market, because it coincides with a time when the Reserve Bank is trying to stimulate the economy by making the cash rate very low.
“The impact that has on mortgage rates tends to have an upward pressure on property prices.”
This move from the RBA is intended to help Australians get jobs, assist businesses and provide people in financial distress with some rate relief, with the average home loan customer saving $33 a month should banks pass on the rate.
With the trend in housing values already rising around most areas of the country, there is a good chance lower rates could see momentum building across the nation’s most valuable asset class.
The RBA’s primary focus from lower interest rates is to ensure businesses are confident enough and willing to invest, as well as encouraging households to spend.
Positivity continues for our regional markets
The pandemic has had an impact on the housing markets in more ways than one, as the popularity of working from home is a factor in supporting regional home prices. The appeal of affordable housing, lower density living and a change in lifestyle has seen the regional housing markets hold their price, even throughout the worst of the COVID related downturn that affected the major cities.
According to Mr Lawless, “the past two months have reversed the previous mild falls across the combined regional areas. In the seven months since March, regional dwelling values are up 1.7% while values across the combined capitals index have fallen by 2.3%.”
But listing numbers remain close to record lows
It is clear that the housing markets are responding positively to the stimulus of low mortgage rates and improved sentiment, with values rising and stabilising across much of the country, but despite the surge in new listing numbers over the past four weeks (up by 25.2 percent), the total advertised inventory levels remain close to record lows, growing by less than 1 per cent.
Continued low total stock levels in the face of surging new listing numbers point to a strong rate of absorption, as buyer demand exceeds advertised supply levels.
At Upside in the last two weeks, we have seen record open home attendance from interested buyers, with attendance consistently hitting historic highs throughout October.
If you’re thinking of taking advantage of the increasingly positive market conditions, get in touch with your local Upside agent today for a free, no-obligation appraisal to see what your home could be currently worth. As part of the process, we also supply a detailed market report of properties that have sold in your immediate area in the last three to six months.