Market momentum continues to pick up nationally following the third cut in interest rates since February.
Industry researcher Cotality has reported a sixth successive month of value gains across the real estate market – a great sign with the spring sales season just around the corner.
Dwelling values rose by 0.6% in July – the same rate of growth that we saw for the previous two months.
In the past three months prices have risen 1.8% – the best quarterly result since June last year when a 2% quarterly result was registered.
On this trend, values across the Australian market could exceed 7% growth annually. Such a result would exceed predictions from the majority of banks and the portals, Domain and realestate.com.au.
That’s not an improbable result following an annual survey by the University of Melbourne and Westpac Bank that showed consumer confidence at a 3½-year high.
The market is not having an untethered ride, however.
Cotality’s research director Tim Lawless has neatly summarised the positive and negative forces hitting the market.
He says the “influence of low supply, falling interest rates and rising confidence” is brushing up against the dampening effect of “affordability constraints and lingering uncertainty”.
As an experienced real estate agency, our agents continue to see how the impact of the third rate cut is being weighed down by affordability issues in the lower and middle tiers of the market.
Global economic uncertainties and job security are also creating caution among some buyers.
However, these negatives have not stopped every capital city from recording a value rise.
Perth continues its excellent performance with a 0.9% rise in July. Only Darwin surpassed its performance, seeing average values climb 2.2%. While the NT is not the centre of real estate, it’s worth noting it has seen prices rise almost 10% in the last seven months.
The softest markets in July were Hobart (0.1%), Melbourne (0.4%) and the ACT (0.5%).
The city markets have overtaken Regional Australia in terms of price growth – the first time this has happened in nine months.
Metropolitan markets have risen 1.8% over the past 12 weeks, while the region saw values 1.7% higher, according to Cotality (former CoreLogic).
Its monthly Housing Value Index survey found prices continue to be underpinned by low inventory levels.
The number of homes for sale is 19% below the five-year average for this time of the year. However, the number of sales is almost 2% above the five-year average, illustrating an active purchasing environment.
This analysis is further supported by national auction clearance rates surpassing 75% on some weekends of July and August.
Houses continue to outpace apartments in terms of value growth.
There is now a 32.3% difference between the average price of a house and an apartment, Cotality reports. That equates to a gap of $233,000. In the past three months, house values have risen 1.9% ($16,700) while units have registered a 1.4% increase ($9,700).
Cotality’s Tim Lawless admitted this result was counter-intuitive when the market was grappling with affordability issues.
He said: “Demand preferences are still weighted towards detached housing options despite the substantially lower price points available across the unit sector.”