Over the past three months, national house prices rose by 7%, with the median house price in Australia now sitting at $634,355.
Source: CoreLogic
After lagging last year, prices in the capital cities have now started to outpace the regional areas. We saw a significant shift from people looking to move away from capital cities last year; however, now many homebuyers are making it clear that the time is right to be jumping back into the capital city markets ahead of regional areas.
Source: CoreLogic
Capital cities have outperformed regional areas twice in the past three months and in May, were 2.3% higher, compared to the 2.0% increase in regional areas. Over the quarter, regional areas have lagged with a 6.5% increase versus 7.1% in the capital cities.
Source: CoreLogic
Top End of the Market is Moving
While the boom in house prices is evident for all to see, CoreLogic’s Tim Lawless notes that it is now the premium end of the market, notably in Sydney and Melbourne, really driving the gains. “Despite the consistently strong headline results, the underlying trends have shifted over the past year,” Mr. Lawless said.
“From a geographic perspective, it was the smaller capital cities that led the housing market out of the COVID slump, but now Sydney has risen through the ranks to record the largest capital gain over the past three months with values up 9.3%.”
Stock Levels Remain Low
Low stock and high demand, coupled with record-low interest rates, continue to create a seller’s market in most areas. CoreLogic notes that while there has been an increase in supply, demand is still outpacing supply in most locations.
The median time on the market remains around its record low of 25 days, while vendor discounting rates are also around record lows, with the typical discount from the original asking price recorded at -2.7% over the past three months.
Source: CoreLogic
“The sales to new listings ratio remain around 1.1, meaning for every new listing, there is more than one sale occurring,” said Mr. Lawless. “This rapid rate of absorption is keeping advertised inventory levels extremely low, despite the rise in new listings. As a consequence, vendors remain in a strong selling position while buyers have a weak position at the negotiation table.”
Positive Cashflow Opportunities
With values rising, CoreLogic believes there are still several opportunities for investors to locate positively geared properties. With the average mortgage rate now around 2.5%, many cities, and regional areas are showing increasing rental yields, making them more cash flow positive than previous years.
