Sydney and Melbourne drive national house values up 1.1 per cent in February: CoreLogic

Sydney and Melbourne drive national house values up 1.1 per cent in February: CoreLogic
Sydney and Melbourne drive national house values up 1.1 per cent in February: CoreLogic

Every capital city apart from Darwin saw dwelling values rise over February, according to CoreLogic's Hedonic Home Value Index.

The national index is now just 1.2 per cent below its 2017 peak before prices started to decline.

CoreLogic's head of research Tim Lawless said at the current rate of growth, the national index is likely to reach a new nominal high over the next two months.

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Sydney and Melbourne drive national house values up 1.1 per cent in February: CoreLogic

Sydney and Melbourne's drastic turnaround continued.

The two biggest capital city markets now in double digit annual returns since the market peaked in mid-2017.

The harbour capital was the best performer over the quarter (+4.6%), ahead of Melbourne (+3.9%).

Both markets have primarily been driven by the turnaround in the housing market.

Sydney house values over the quarter are 5.4% higher, compared to 2.9% in units. It's the same story in Melbourne, houses up 4.5%, units 2.7%.

In fact Melbourne was the most recent capital to stage a nominal recovery, with housing values surpassing the September 2017 peak last month. 

Melbourne has joined with Brisbane, Canberra, Hobart and Adelaide where housing values are also tracking at record highs.

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Sydney and Melbourne drive national house values up 1.1 per cent in February: CoreLogic

“The primary factors driving this rebound remain in place and include an extremely low cost of debt and improved borrowing capacity," Lawless said.

"However, considering the sluggish pace of household income growth, housing affordability is eroding rapidly which is likely to see some parts of the market become less active.”

The most expensive end of the market has seen the strongest performance, following the larger correction, however Lawless suggests "structural factors may also be at play".

He said this includes a rise in borrowing capacity following changes to serviceability assessment from APRA in July 2019 and the dominance of owner occupier buyers (rather than investors) through the recovery phase to date.”

“With lenders favouring ‘high quality’ borrowers, buyers with a large deposit and low level of debt relative to their incomes, are likely to be those who receive the lowest mortgage rates - another factor that could be supporting demand at the more expensive end of the market.”

Joel Robinson

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

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House Price Growth Corelogic

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