Adelaide leaps, Hobart sleeps: A tale of two cities in Australia’s housing market revival

By Our Reporter
Representational photo by Maximillian Conacher on Unsplash

Amidst the whispers of recovery in the national housing market, CoreLogic’s latest model upgrade has borne fruit with the Home Value Index (HVI) ticking up by 0.8% in September, marking the eighth straight month of burgeoning growth. This follows closely on the heels of a 0.7% ascension in August, propelling the quarterly surge in national home values to a sturdy 2.2%. However, the slight easing from a 3.0% leap in the June quarter hints at a gentle slowdown, as the market simmers down with a rise in advertised stock levels.

Among the cities leading the charge, Adelaide emerged as the frontrunner with a sterling capital gain of 4.3% over the September quarter. Trailing close behind were Brisbane and Perth, boasting gains of 3.9% and 3.6% respectively. In stark contrast, Hobart languished at the other extreme with a dip of -0.2%, nudging the city to a fresh cyclical nadir.

CoreLogic’s research maestro, Tim Lawless, shed light on the performance metrics, attributing the varying pace of growth across cities to the intrinsic supply dynamics at play. The triumvirate of Adelaide, Brisbane, and Perth, all riding high on capital gains, showcased advertised supply levels plummeting around 40% below their former five-year average. Meanwhile, Hobart, still grappling with declining values, exhibited an almost 40% surge in advertised supply levels above its five-year average since June of the previous year.

From the abyss in January, the national index has sprung back by 6.6%, albeit home values are still trailing 1.3% behind the zenith recorded in April last year. Lawless prognosticated, given the current trajectory, the national HVI is on track to crest to a new nominal high come the end of November.

The September quarter also unravelled a slight shift in market dynamics. The premium housing sector, once the vanguard of the recovery cycle, appears to be running out of steam with the quarterly growth rate across upper quartile dwellings dialling back to 2.3%. Conversely, the lower quartile amped up its growth rate to 3.2%.

Lawless elucidated this shift, pinpointing a brisker pace of growth in lower value capitals like Perth and Adelaide. Nonetheless, even within these cities, it was the lower quartile leading the charge. In the steeper-priced terrains of Sydney and Melbourne, the middle market is now stealing the limelight, spurred perhaps by renewed affordability hurdles channeling demand where entry barriers are lesser.

However, the regional markets are yet to catch up with their capital city counterparts. The ‘rest of state’ regions tallied a modest 1.1% uptick in dwelling values over the September quarter, which pales in comparison to the 2.5% boost witnessed across the combined capital city market.

The softer housing scenario sprawling across regional Australia seems to be tethered more to demand dynamics, with home sales estimates tumbling by 6.5% compared to a year ago and sagging 9.2% against the previous five-year average. In juxtaposition, the combined capital cities saw a 1.9% and 6.3% swell in home sales volumes over the same timelines.

Regional markets, albeit with relatively low advertised supply levels, are yet to feel the full brunt of upward value pressure. The exceptions being regional Victoria and regional Tasmania where above-average advertised supply dovetailed with a downtrend in housing values over the quarter.

As the housing market narrative continues to unfold, the diverse trajectories of city markets paint a compelling picture of a nation in flux, each city carving its own path through the maze of recovery.

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