Theresa Worrell: National Housing Market Update [video]

The recovery in housing value accelerated in August with national dwelling values increasing by eight-tenths of a percent over the month.

CoreLogic has released their newest housing market update for September 2019.

This was the first month on month rise in the national index since values peaked in October 2017 and it was the largest monthly lift since April 2017.

The August reading was certainly a step up in the pace of recovery, however, market conditions have been consistently improving throughout 2019 as the rate of decline last momentum, with national values stablishing in July before rising in August.

Property Portfolio Risks

The significant lift in values over the month aligns with a consistent increase in auction clearance rates and a deeper pool of buyers at a time when the volume of stock advertised for sale remains low.

It`s likely that buyer demand & confidence is responding to the positive effect of a stable federal government, as well as lower interest rates, tax cuts and a subtle easing in credit policy.

Housing values increased across five of the eight capitals over the month but slipped lower in Adelaide, Peth and Darwin.

Across the rest-of-state regions, only Victoria, Tasmania and Northern Territory recorded monthly increases.

August marked the third successive month of capital gain in Sydney, Melbourne and Hobart and the second successive month of increases in Brisbane.

So, while the recovery trend is still early, it does appear that growth trends are gathering some pace, particularly in the largest capital cities.

Across the regional areas of Australia, 11 of the 42 sub-regions have recorded a rise in dwelling values over the past three months and two regions have returned a stable result.

Regional areas where values increased over the rolling quarter include the Capital Region, Newcastle and Lake Macquarie and Richmond-Tweed in NSW, Wide Bay, Mackay-Isaac-Whitsunday and Townsville in Qld and Geelong in Vic.

Evidence of growth returning to areas such as Newcastle, Lake Macquarie and Geelong may well be a hint that the value growth occurring in Sydney and Melbourne is already beginning spillover into nearby regions.

Looking at the market performance by broad valuation cohorts and it’s clear that the more expensive end of the market in Sydney and Melbourne is the primary driver of rebounding capital gains.

The rapid recovery across higher valued properties makes sense considering this sector of the market recorded a more substantial correction.

Additionally, borrowing capacities have recently increased thanks to a relaxation of serviceability assessments from APPRA.

For prospective buyers looking to upgrade into a larger or more expensive property, it seems to be an opportune time.

While dwelling values are now rising, the same results cannot be shown for the national rental market with rents recording a further fall of -0.1% over August 2019$ the third consecutive month of negative rental movements.

The only exceptions were in Brisbane, Adelaide and Hobart where rental rates increased over the month.

While rents softened over the past month, rental rates increased in all capital cities other than in Sydney and Darwin over the past year.

With value growth now outpacing rental growth, the improving trend in capital city gross rental yields is now reversing.

Most regions are recording yields higher relative to a year ago, however, the more recent trend in the data shows yields are now stabilizing or trending lower.