Sydney house prices posted positive annual growth for the first time despite a rise in listings according to CoreLogic.
Sydney’s home values are now higher than a year ago, rising 0.7 per cent over the past 365 days to August 27, which is the first positive annual growth since prices started falling last year, CoreLogic’s daily index shows.
The August home value index due to be released on Friday will likely show an even higher 12-month gain, despite the marked increase in total listings, said Tim Lawless, CoreLogic’s research director.
“Sydney’s recovery has become entrenched, so while prices have slowed since May, we’re still expecting to see 1 per cent growth this month, which is a pretty strong outcome for quite an expensive market,” he said.
“This is especially the case when you consider interest rates are high, sentiment is very low, and we’re still seeing cost of living pressures eroding household budgets.
“So even though we are seeing the number of total listings pushing higher, it’s still below average, so the market is not becoming oversupplied or even balanced.”
Sydney’s home values started falling on a yearly basis in August last year after prices dropped by 2.5 per cent over the month, which was the largest monthly decline during the downturn. It coincided with the RBA’s decision to raise the cash rate by 0.5 of a percentage point for the third consecutive month.
Since peaking in January 2022, Sydney house prices had dropped by 6.4 per cent, but had risen by 8.8 per cent since bottoming out early this year.
“Sydney hasn’t quite fully recovered the 14 per cent peak-to-trough decline, but if this pace of monthly growth continues, prices could hit new record highs by early next year,” Mr Lawless said.
“So in that context, the Sydney market may still offer some opportunities for people who are looking to get in.
“We’re expecting listings numbers to rise further from here as we come into the spring season, so there’s going to be more options for people who are looking to buy before the market reaches a new peak.”
New listings have risen by 24 per cent across Sydney during winter, lifting the total listings by 5.6 per cent to 20,573 homes.
At this level, the market has 1.6 months of supply, which is slightly above the decade average.
The month of available supply also rose in Melbourne, which is now at two months, indicating that listings are sitting on the market for longer.
By contrast, the month of available supply shrunk dramatically across Brisbane, Perth and Adelaide, to just over one month.
“Even though we’ve seen a rise in new listings coming to the Perth, Adelaide and Brisbane markets, they’re nowhere near as much as Sydney and Melbourne, so the total listings are still falling in these smaller cities,” Mr Lawless said.
“The large drop in total listings in those capitals shows stock is being absorbed very quickly, so you’d have to think that anyone buying there is feeling a renewed sense of urgency.”
House prices in Brisbane, Adelaide and Perth re-accelerated in the past month, rising between 1 per cent and 1.4 per cent, reflecting the tight supply, said Mr Lawless.
Since bottoming out, Brisbane house prices climbed 6.3 per cent higher and have increased another 6 per cent from the peak.
Re-acceleration
House prices in Adelaide and Perth hit new records after rising by 4.7 per cent and 5.4 per cent since the recent troughs respectively.
“Adelaide and Perth in particular are seeing re-acceleration in price growth underpinned by such low stock levels,” Mr Lawless said.
Total listings in Perth plummeted by 15 per cent since early June to August 20 despite a 1.6 per cent lift in new listings. Adelaide dropped 6.1 per cent while Brisbane fell by 2.7 per cent.
But some markets are starting to rack up large increases in listings relative to supply amid rising interest rates, according to separate analysis by data analytics firm Suburbtrends.
Of the 340 areas analysed, 44 are now showing large increases in inventory levels, which could weigh on prices, according to Kent Lardner, founder of Suburbtrends.
These include Bringelly-Green Valley and Rouse Hill in Sydney where total house listings more than doubled over the month to August.
Inventory levels are now at 8.98 months in Bringelly after stock increased to 1687, while Rouse Hill has 11.66 months’ worth of supply as listings jumped 139 per cent to 1027 over the month.
In Blacktown-North, unit listings climbed by 58 per cent to 1155, lifting the inventory level to 19.92 months worth of supply.
Inventory level for units also increased substantially in Pennant Hills, now sitting at 10.94 months, after listings rose by 23 per cent to 279.
In Stonnington East in Melbourne, unit listings increased by 30 per cent to 730 over the month, taking the inventory level to 11.02 months.
“While a subset of markets does show signs of softening demand and rising listings, it’s worth noting that market conditions are inherently volatile and can pivot quickly,” Mr Lardner said.
“For those compelled to make quick exits, forced sales in such densely stocked markets can lead to financial repercussions, but it’s a scenario we hope to see mitigated through stable or even falling interest rates.”
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