National

Housing market still in recovery but losing some heat

By AAP Newswire

Jul 3, 2023

A file photo of a For Sale sign — Australian house prices continued to rise in June, with Sydney and Brisbane leading the rebound. -AAP Image

The housing market recovery is still humming along but the prospect of more interest rate rises could be keeping the pace of growth in check.

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National home prices as calculated by CoreLogic rose 1.1 per cent last month but growth decelerated across most markets.

Sydney continues to lead the rebound, posting 1.7 per cent growth in June, down a touch from the 1.8 per cent increase in May.

Brisbane was the only other city to record above one per cent growth, lifting a convincing 1.3 per cent in June.

This was down from 1.4 per cent in the month prior.

The deceleration across Perth prices was more pronounced, with home values increasing by 0.9 per cent in June but down from 1.3 per cent in May.

CoreLogic research director Tim Lawless said the slowdown in the pace of capital gains could be a reflection of shifting sentiment as the Reserve Bank remained determined to beat down stubbornly high inflation.

"Higher interest rates and lower sentiment will likely weigh on the number of active home buyers, helping to rebalance the disconnect between demand and supply," he said.

Despite the slower pace of growth, Mr Lawless said the upswing was widespread, with every capital city aside from Hobart recording higher dwelling values in June.

Regional dwelling values also lifted but more slowly compared with the big cities, growing by 0.5 per cent collectively.

Regional Victoria remains stuck in negative territory, however, and was the only regional state market to decline over the quarter.

"The weaker conditions across regional parts of the state may be related to a normalisation in migration flows as more regional residents move to the city, along with a substantial narrowing of the affordability gap between regional Victoria and Melbourne through the recent upswing," Mr Lawless said.

Nationally, home values are yet to unwind the downturn triggered by the interest rate hiking cycle, and have recovered 3.4 per cent from their floor in February.

The overall market remains six per cent below its peak recorded in April 2022.

A separate measure of housing prices prepared by PropTrack, released on Saturday, showed national prices rising 0.3 per cent over the month to fall just shy of where they were one year earlier.