Migration, high rents put brakes on sliding home prices

Poppy Johnston |

Sydney has led a turnaround in national property prices after the market tracked down for 10 straight months.

The 0.6 per cent uptick in national home values as measured by CoreLogic marks the first positive result after rising interest rates began forcing prices down last year.

Peak to trough, home prices have fallen 8.5 per cent since April 2022.

The downturn, however, has hardly unwound the massive 28.6 per cent upswing in prices during the pandemic.

Melbourne is the one big city close to undoing its COVID-19 uplift, with only a 0.6 per cent buffer. 

A separate index for measuring property prices prepared by PropTrack also recorded a reversal of the downward trend, lifting 0.13 nationally over the month of March.

CoreLogic research director Tim Lawless put the first monthly improvement in national home prices down to the tight rental market, the return of overseas migrants and a shortage of new homes listed on the market.

He said these factors have been enough to counter the downward pressure of higher interest rates.

“With rental markets this tight, it’s likely we are seeing some spillover from renting into purchasing, although, with mortgage rates so high, not everyone who wants to buy will be able to qualify for a loan,” Mr Lawless said. 

He said record – and rising – migration levels were also playing a role, with some permanent or long-term migrants likely to be deterred by the tough rental conditions and skip straight to buying a home.

After the premium end of Sydney’s property market experienced the sharpest downturn – falling 17.4 per cent from its peak in January 2022 – values have lifted two per cent in March as opportunistic buyers returned to the market.

Prices across the city as a whole increased by a substantial 1.4 per cent, with prices also lifting in Melbourne (0.6 per cent), Brisbane (0.1 per cent) and Perth (0.5 per cent).

All other capital cities recorded declines, with Hobart falling the most over the month, by 0.9 per cent.

Regional housing markets also recorded a 0.2 per cent increase with the strongest gains seen in rural markets, in contrast to the commutable coastal and lifestyle markets that dominated the COVID boom.