Photograph: Lukas Coch/AAP
Australian home prices are back at record levels, recovering all of the 7.5% dip from their previous peak in April 2022, according to the data group CoreLogic.
As of Wednesday, Corelogic’s home value index had climbed 8.1% higher than the recent nadir reached at the end of January this year, defying five additional interest rate rises by the Reserve Bank since then.
“The V-shaped recovery may seem counter intuitive, 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,” CoreLogic’s executive research director, Tim Lawless, said.
Across individual cities, housing prices were at record highs in Perth, Adelaide and Brisbane, while Hobart values were still down 11.8% and the ACT’s 6.4% from their peaks. They were also down 1.8% in Sydney and 3.6% in Melbourne.
While more of the market was likely to return to record levels, the pace of price increases was tapering as affordability pressures mount and borrowing costs continue to climb, Lawless said.
“The good news for prospective buyers is that the pace of growth is clearly easing in some markets as advertised stock levels rise and purchasing demand remains fragile.”
The RBA earlier this month raised its cash rate for a 13th time in the current cycle to a 12-year high of 4.35%, with the 25 basis-point increase still to take effect for many borrowers.
Other signs point to the real estate market nearing its apex, even as the population swells. Last week the preliminary clearance rate at auctions also eased to 68%, or the lowest since Easter, CoreLogic said.
The tally of auctions, most of which were in Melbourne and Sydney, topped 3,000 for only the second time this year, but it still has a long way to recover to recent levels.
“Although inventory levels are now rebalancing as vendor activity picks up, listings remain 16.6% below the previous five-year average nationally,” Lawless said, adding that demand was “roughly in line with the five-year average”.
SQM Research, another data group, earlier forecast dwelling prices in Sydney and Melbourne were likely to see “moderate” falls in 2024.
“The base case forecast is for average national dwelling prices to change between -1% to 3%,” SQM said, adding Perth and Brisbane were the only cities expected to record price rises next year.
The RBA noted in the minutes of its November board meeting that housing prices had increased over the past nine months, with the additional wealth “expected to provide some support to consumption” in the economy.
“Housing loan commitments had increased in preceding months to be 9% above the low point in February 2023,” the RBA said. “Nonetheless, housing loan commitments remained almost 30% below their peak in January 2022, consistent with the effect of higher interest rates on maximum borrowing capacity.”
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