The latest CoreLogic Home Value Index (HVI) rose by another 0.7% last month, bringing the median property prices in Australia to about $794,000 – just scant away from $800k. 

Since February, national home values have consistently increased between 0.5% and 0.8% as strong demand amid low supply continues to overshadow the impacts of high interest rates on borrowing capacity. 

“The persistent growth comes despite an array of downside risks, including high rates, cost of living pressures, affordability challenges, and tight credit policy,” CoreLogic research director Tim Lawless said. 

If the HVI continues to rise at this rate, the median property prices Down Under are on track to jump past $800,000 by the end of the year. 

As it stands, it’s likely to be going that way, at least in the near term. 

“The housing market resilience comes back to tight supply levels which are keeping upward pressure on values,” Mr Lawless said.  

Despite marked increase in new listings – about 12% higher than a year ago – the competition remains relatively tight. 

The CoreLogic report revealed properties are getting snapped as fast as they are added to the market with the total advertised supply levels sitting nearly 18% below the previous five-year average. 

Where supply is lowest, price gains are highest

The impact of low supply is evident in how prices have moved in markets with a severe home shortage.

For example, the number of homes advertised for sale in Perth was 23% lower over the four weeks ending June. 

The Western Australian capital posted the strongest price gain in the same period, up 2% to $757,399. 

Real estate listings in top property hotspots Adelaide (down 43%) and Brisbane (down 34%) have likewise fallen significantly below average for this time of year. 

Median home prices in Adelaide climbed 1.7% to $767,974, while Brisbane saw a 1.2% lift to bring the median value to $859,240. 

Previous indices, as well as various property price reports and forecasts, have highlighted that the three mid-sized capital cities have been driving the majority of the lift. 

In fact, property prices in the three capitals have more than doubled from their pre-pandemic levels: Perth is up 66.6%, Adelaide is up 63.9%, and Brisbane is up 61.5%. 

The latest CoreLogic figures however show that Brisbane, which previously took the second spot for the most expensive property market from Canberra in May, has returned the title to the ACT capital whose median home value currently sits at $870,071 (up 0.3% m/m). 

Melbourne records the biggest price fall 

In contrast, Melbourne, where listings have risen to 14% above the five-year average, posted the biggest price drop of -0.7% last month.

Median home value in Melbourne has settled at $783,205 as of 30 June. 

Oversupply and negative investor sentiment continue to weigh on the Victorian capital which now lags behind Sydney, Canberra, and Brisbane. 

CoreLogic data shows Melbourne's home value has fallen 3.9% from its peak. 

The city also posted the slowest price increase among all capital cities since the onset of Covid, growing by 11.2% to June. 

A separate index run by PropTrack produced similar results, revealing Melbourne home prices’ steep drop (down 43% m/m) in the month prior.

“Price momentum is weaker in Melbourne as buyers have consistently enjoyed more choice relative to other markets,” PropTrack senior economist Eleanor Creagh said. 

In addition to soft selling conditions, Ms Creagh said construction rates having been “somewhat balanced” relative to population growth in Victoria are slowing property price growth.  

Housing supply gets a boost as more home buyers receive support

Surely, rising home prices are good news for homeowners given strong and broad based rates of capital gain over the past four years. 

So much so that “most homeowners who need to sell should be able to clear their mortgage debt”, according to Mr Lawless. 

CoreLogic’s latest Pain & Gain report highlighted the vast majority of vendors are selling their homes for a gross profit on resale, with only 5.7% of homes selling at a gross loss. 

Similarly, the RBA’s latest Financial Stability Review estimated only around 1% of home loans had a debt level higher than the asset value. 

While the majority of homeowners enjoy their gains, a sliver of hope may be forthcoming for aspiring home buyers who are dealing with tight competition for limited supply and continuously rising prices. 

Today marks the official start of the government’s five-year target of delivering 1.2 million “well-located” homes under the National Housing Accord. 

But to reach the target, Property Council chief executive Mike Zorbas reminded the government that the current build rate must pick up. 

“We need to move from 170,000 homes a year now into the high 200,000s in order to average 240,000 over the five years,” he said. 

“We need to apply increasing amounts of federal money, state resources and an attitude of ‘yes’ to hit that target.”

Another uplift was delivered by Housing Australia, as an additional 50,000 places are made available through the Home Guarantee Scheme (HGS) starting from 1 July. 

Eligible applicants can have the government act as guarantor for as much 18% of the property value, allowing them to take out a home loan and avoid lenders mortgage insurance with less than 20% deposit. 

Housing Australia works with participating lenders to facilitate loans to eligible home buyers. 

An additional 35,000 spots are now available on the First Home Guarantee (FHBG), 10,000 places for the Regional First Home Buyer Guarantee (RFHBG), and an additional 5,000 for the Family Home Guarantee (FHG).

“We look forward to continuing to work with our participating lenders and their broker networks to help more aspiring homeowners get their foot on the property ladder,” HGS chief program officer Jennifer Chew said. 

Photo by Patrick Ryan on Unsplash