Big cities lead as property market rebound gathers pace

Poppy Johnston | June 1, 2023

The major cities are leading a fiery recovery in housing prices as regional markets also start to pick up.

After the residential property market tracked lower for much of last year, it’s now staging a comeback with the CoreLogic home value index recording a third consecutive monthly improvement.

The rebound picked up pace in May, jumping 1.2 per cent – the strongest month of growth since November 2021.  

A separate index from PropTrack similarly posted an acceleration in dwelling prices, with the gauge recording a 0.33 per cent lift in national prices across the month.

Sydney, particularly the premium end of the market, has been leading the turnaround.

Values surged 1.8 per cent across the month, according to the CoreLogic dataset, with the Sydney market now 4.8 per cent above its trough in January. 

Home prices in Brisbane also posted a convincing 1.4 per cent gain and Perth’s market jumped 1.3 per cent.

Western Australia’s biggest city is now the only capital back at record highs, with the other urban centres still recovering from downturns. 

CoreLogic research director Tim Lawless said low housing supply was butting up against rising demand and driving up prices.

“With such a short supply of available housing stock, buyers are becoming more competitive and there’s an element of FOMO (fear of missing out) creeping into the market,” he said.

Auction clearance rates were trending higher, lingering at 70 per cent to above in the past three weeks.

The regional index also improved but growth was nowhere near the capital cities.

Housing lifted 0.5 per cent across the combined capitals in May after lifting 0.2 per cent and 0.1 per cent in the previous two months. 

The return to price growth in the home-buying market comes as rental affordability is stretched to its limits. 

Reserve Bank governor Philip Lowe said rents, as measured by the consumer price index, were expected to get close to 10 per cent.

In response to the rental crisis, the federal government has boosted Commonwealth Rental Assistance and is trying to push its new housing fund through Parliament.

The $10 billion fund, which will deliver returns that will be used to build more social and affordable homes, needs the support of the Greens but the party wants more ambition. 

At the Property Council leaders’ summit, Housing Minister Julie Collins said there were all kinds of arguments for opposing the fund.

“It’s too much, it’s too little, it’s too soon, it’s not soon enough,” she said.

The minister said Labor would not apologise for wanting to build more homes for those in need.

“We will continue making this case and continue to talk to other parties and senators about the Housing Australia Future Fund,” she said.