The unexpected shift in the direction of property prices continued in April, leading a growing number of experts to call the end of Australia's market downturn.
The latest CoreLogic report1 detailed further stabilisation across the bulk of the country as persistently low listings are met with growing demand.
With interest rates approaching their peak, buyer activity increasing and migration surging, is the market already going to bounce back?
Following March, when we saw the first break in price declines for 10 months, the median Australian home value got another +0.5 per cent bump in April.
Again, results were mixed between different cities and regions, but there was stabilisation in the vast majority of markets.
Sydney continued to push ahead of the pack with a +1.3 per cent rise in median price. Melbourne, meanwhile, eased back and recorded a +0.1 per cent bump for the month.
Both Brisbane and Adelaide remained in positive territory with increases of +0.3 and +0.2 per cent respectively, helping to confirm that the sharp downward trend in Brisbane seems to be over.
Perth had another standout month, posting new all-time-high prices with a +0.6 per cent jump in April.
Canberra and Hobart remained flat, leaving Darwin as the only capital city to see a decline of -1.2 per cent.
Regional markets were softer with combined monthly growth of just +0.1 per cent, although there were dips in NSW and Victoria.
Tim Lawless, CoreLogic's Research Director, said "not only are we seeing housing values stabilising or rising across most areas of the country, a number of other indicators are confirming the positive shift."
"Auction clearance rates are holding slightly above the long run average, sentiment has lifted and home sales are trending around the previous five-year average."
Listings have been falling well below average levels since September 2022, a trend that has only grown more severe in recent months.
In April, new listings dropped -22.9 per cent lower than they were a year ago, while the shortage of total listings fell -21.8 per cent below the five-year average.
Compared to available stock, buyer demand has held strong. The volume of home sales across the capitals was only -2.4 per cent below the five-year average, so demand is considerably outstripping supply.
"If we see a further lift in consumer sentiment there is a good chance housing activity will trend higher," Mr Lawless said.
"This has certainty been the case historically, where measures of consumer sentiment and the number of dwellings sales have shown a high correlation."
The usual expectation would be that listings fall further as we head into winter. Mr Lawless suggested we may see an increase in sellers rejoining the market, though, as they try to beat the rush of the spring selling season this year.
The rental crisis has been a dominant topic over the past year, with vacancy rates hovering around historic lows and asking rents soaring.
Since international borders reopened, net migration into the country has hit a rapid pace. Forecasts now estimate somewhere in the region of 700,0002 new entrants adding to the competition between the 2022 and 2024 financial years.
Mr Lawless said that "a significant lift in net overseas migration has run headlong into a lack of housing supply."
With rental markets so tight, he poised that "it’s reasonable to assume more people are fast tracking a purchasing decision simply because they can’t find rental accommodation."
Matthew Hassan, Westpac's Senior Economist, agreed3 by saying that "there’s not really an end in sight in this tight rental market and rents are likely to continue to move higher."
As long as the rental crisis sticks around, a growing number of first home buyers are likely to emerge and boost demand with fewer and fewer listings to choose from, putting further upward pressure on property prices.
There seems to be a growing sense amongst experts that, save for further unexpected twists, the wider downturn may be over.
"Typically, we wouldn’t see housing values start a new growth cycle until monetary policy started to ease, credit policies loosened or some level of fiscal support was introduced. The shift towards more positive conditions has come about in the absence of these factors," Mr Lawless said.
"The key drivers of this positive inflection seem to be the larger than expected rise in net overseas migration which has created additional housing demand at a time of extremely tight rental conditions and well below average levels of advertised supply."
Westpac and NAB have both revised their previously pessimistic price forecasts for 2023. Westpac now expects home values to hold flat throughout the year4.
The surprise interest rate rise in May could prove to upset the new trend, though, particularly if further hikes are still to come.
Either way, the longer-term question revolves around when we might start seeing rate cuts, at which point CoreLogic said "we could see more sustained momentum gather in housing markets."
For the time being, buyer competition looks to be strong in the face of dwindling stock, a theme that could continue across the quieter winter months.
1. CoreLogic News, 'CoreLogic Home Value Index: Further evidence Australia’s housing downturn is over', 30 April 2023
2. ABC News, 'Australian migrant population growth hits all-time high as borders reopen', 29 April 2023
3. Sydney Morning Herald, '‘Whiplash’: Rental crisis deepens as Sydney unit rents jump $120 a week in a year'
4. Westpac IQ, 'Australia’s housing market set to stabilise', 24 April 2023
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