CoreLogic’s Home Value Index last month reported a 0.6 percent increase across the country and 1.4 per cent in Sydney for March. Sydney also posted the strongest monthly gain in apartment prices across the country, with CoreLogic stating it was likely “the start of a slow recovery phase”.
The numbers were enough for Westpac’s economists Matthew Hassan and Bill Evans to declare: “Australia’s housing correction is largely over.”
CoreLogic’s Research Director Tim Lawless said: “Although interest rates are high and there is an expectation the economy will slow through the year, it’s clear other factors are now placing upwards pressure on home prices.”
One key factor driving demand for property is the tight rental market which is resulting in “some spillover from renting into purchasing”, says Lawless.
“Similarly, with net overseas migration at record levels and rising, there is a chance more permanent or long-term migrants who can afford to, will skip the rental phase and fast track a home purchase simply because they can’t find rental accommodation,” he adds.
Corelogic’s Head of Residential Research Eliza Owen says the recent rises in property prices are a signal Sydney was “moving through to the next cyclical phase”. “Looking ahead, the proportion of suburbs recording a rise in values could start to trend higher. If this cycle mirrors historic ones, the higher-tier markets of Sydney and Melbourne are likely to show more suburbs in upswing over the coming months,” says Owen.
Return of property investors
The Head of Research at the real estate firm CBRE, Sameer Chopra, says the record levels of immigration into Australia are set to see continued rise in rents and in turn increased demand from investors in apartments.
“I think these demand conditions are going to add a lot of fuel to this fire. If you look at the actual vacancy data, vacancy in our city has gone from around 3.5 percent to close to 1 percent,” says Chopra.
“I expect with this robust rental growth that investors come back to the market.”
Proptrack Senior Economist Eleanor Creagh noted the impact of higher mortgage rates was “being counterbalanced by strong demand drivers.”
“A strong rebound in immigration and tight rental markets, combined with the limited stock on market, are underpinning home prices,” says Creagh.