CoreLogic’s national home value index rose 0.9 per cent over the first month of 2021, taking Australian housing values to a fresh record high. Values have now surpassed pre-COVID levels by 1.0 per cent, and the index is 0.7 per cent higher than the previous September 2017 peak.
Every capital city and region recorded a rise over the month, ranging from a 2.3 per cent surge across Darwin to a relatively mild 0.4 per cent rise in Sydney and Melbourne.
Continuing a trend that became evident early in the pandemic, regional housing values rose at more than twice the pace of the capital city markets. CoreLogic’s combined regionals index was up 1.6 per cent over January, while capital city values were 0.7 per cent higher. Since the onset of COVID-19 in March last year, regional housing values have surged 6.5 per cent higher while capital city housing values are down -0.2 per cent over the same time frame.
According to CoreLogic’s research director, Tim Lawless, the divergence between metro and regional housing demand in New South Wales and Victoria is more substantial than in other states.
“Internal migration data shows more people are leaving Sydney and Melbourne for regional areas, resulting in a transition of activity from the metro regions to the outer fringe and regional markets”, Lawless said, adding that lower demand due to stalled overseas migration has exacerbated the trend. “As Melbourne and Sydney historically receive the vast majority of overseas migrants, these metro areas have been the hardest hit by this demand shock. Better housing affordability, an opportunity for a lifestyle upgrade and lower density housing options are other factors that might be contributing to this trend, along with the new found popularity of remote working arrangements.”
Another broad trend that is becoming increasingly evident is the outperformance of houses over units. At a national level, house values have risen by 3.5 per cent over the past six months while unit values are unchanged. More recently, the past three months has seen every capital city record a stronger result for houses over units.
“Demand for units has diminished through COVID-19 amidst record low levels of investor participation and changing living preferences”, Lawless said. “At the same time supply levels are heightened in some precincts. While demand and supply remain imbalanced we are likely to see units continue to underperform relative to detached housing markets.”
Source: EPS Property Search