Australian dwelling prices rebound: Matthew Hassan

Australian dwelling prices rebound: Matthew Hassan
Matthew HassanDecember 7, 2020


After a material 10.7% correction over the previous two years, Australian dwelling prices have posted a clear recovery since mid-2019, the pace accelerating month to month.

The CoreLogic home value index, covering the eight major capital cities rose 2% in Nov following a 1.4% gain in Oct, a 1.1% gain in Sep and a 1% gain in Aug.

Annual price growth ticked up to 0.4%yr, the first positive annual pace since March 2018. Prices are still 5.1% below their Sep 2017 peak but could surpass that level in early 2020 if the rebound continues at its current pace.

Several factors have contributed to the turnaround including: reduced uncertainty around housing-related tax policy following the Federal election in May; 75bps in rate cuts from the RBA; and some easing in regulatory guidelines for loan serviceability assessments. 

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Australian dwelling prices rebound: Matthew Hassan

All major capital cities recorded gains in Nov, as did most smaller capitals and non-capital city areas within states. Only Darwin, and regional areas in WA and NT recorded declines in Nov. In annual growth terms, Sydney and Melbourne are both seeing positive gains, but prices in other major capital cities and are still down on a year ago. 

Sydney recorded a thumping 2.7% gain in Nov, the strongest monthly rise since Oct 1988. Prices are up 1.6%yr but still 9.4% below their peak in mid-2017. Houses and top and middle tier properties are now outpacing other segments.

Melbourne recorded a 2.2% rise following a 2.3% gain in Oct that was the strongest since 2009. Having come through a milder price correction, the gains mean Melbourne prices are now only 3.7% below their late 2017 peak. As with Sydney, houses and top tier properties are leading the gains. 

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Australian dwelling prices rebound: Matthew Hassan

Brisbane dwelling prices posted a solid 0.8% rise for the second month in a row – the best back to back gains the market has seen in a while but with prices still down slightly by 0.5% on a year ago. Houses and 'top tier' property are showing a more meaningful lift. 

Perth dwelling prices posted a 0.4% gain, the first positive month since Apr 2018. The gain was driven by a 0.9% rise in 'top tier' properties, other segments flat or down slightly. Prices overall are still down 7.7%yr. 

Across the other capital city markets: Adelaide dwelling prices rose 0.5% but still down 0.5%yr; Canberra rose 1.6%mth, 3%yr; Hobart rose 2.3%mth, 4.2%yr; and Darwin fell 1.2%mth to be down –10.9%yr.

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Australian dwelling prices rebound: Matthew Hassan

The recovery that began mid-year has now gained significant momentum and is starting to broaden.

It remains a 'thin' market sales-wise but buyer sentiment points to a further lift in demand in early 2020.

Price gains are expected to moderate as supply starts to lift and as affordability strains re-emerge.

See our latest Westpac Housing Pulse report for a more detailed run down on the situation and outlook.

Read the full report: 'Australian dwelling prices November'.

Matthew Hassan is a Senior Economist at Westpac.

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