Theresa Worrell: National Housing Market Update [video]

The housing market recovery has continued to gather some pace through the month, with our national index up 1.7% last month, delivering the fifth consecutive monthly rise coupled with the largest month-on-month gain since 2003.

The latest update takes national dwelling values back into positive annual growth for the first time since April 2018.

Since finding its trough in June earlier this year, the national dwelling value index has recovered by 4.7%.

Although values are recovering rapidly, at a national level home values remain 4.1% below their 2017 peak, tracking roughly at the same level as January 2017.

Sydney and Melbourne continued to drive the rapid recovery, with values up by 2.7% and 2.2% respectively over the month, while each of the remaining capital cities, apart from Darwin, recorded a rise in values in November.

In a significant turn of events for the Perth market, values edged higher in November; the first month-on-month rise in dwelling values since the downtrend took a pause in early 2018.

Dwelling values have been trending lower since mid-2014, down a cumulative 21.3% through to the end of November.

Over the past thirteen years, Perth has seen house values move from being among the most expensive across the capital cities to now be the lowest; great news for first home buyers, however, Perth homeowners have seen a material reduction in their wealth over the past five and a half years.

A variety of factors are supporting the strong gains in housing values.

The synergy of a 75 basis points rate cut from the Reserve Bank, a loosening in loan serviceability policy from APRA, and the removal of uncertainty around taxation reform following the federal election outcome, are central to this recovery.

Additionally, we’re seeing advertised stock levels persistently low which is creating a sense of urgency in the market as buyer demand picks up.

There’s also the prospect that interest rates are likely to fall further over the coming months and an improvement in housing affordability following the recent downturn are other factors supporting a lift in values.

While housing values trend higher, rents are sluggish.

Across the combined capital cities, rents were unchanged in November and only 0.4% higher over the past twelve months.

Softer rental conditions can be attributed to a range of factors including the recent history of rising rental supply, demonstrated by unprecedented levels of investment participation in the housing market between 2012 and 2017, as well as a significant increase in dwelling construction skewed towards rental accommodation in the high rise apartment sector.