Sydney and Melbourne lead recovery with first rise in property prices since 2017

The east coast residential property market looks to be returning to sunny conditions with improving conditions and reports leading us through the winter months.

CoreLogic’s monthly data has indicated that Sydney and Melbourne are reportedly finding their feet, with the first rise in values since their peaks back in 2017. Reports from CoreLogic’s Hedonic Home Value Index has shown that month-on-month declines are reducing amid continued improvements to market conditions.

Sydney increased 0.1% for the month during June, the first rise since market peak in July 2017. While Melbourne experienced a 0.2% increase in June, its first since November 2017.

CoreLogic’s head of research Tim Lawless said that while federal election results and interest rate cuts in early June certainly added some positive boost in sentiment, the improving conditions through to mid-May were largely ‘organic’.

“From the middle of May, there’s been a raft of good news around the stability of the federal government and the removal of tax changes relating to property. Then in June, of course, lower mortgage rates. I think we’ve seen a number of outcomes and announcements that have positively affected the marketplace,” Mr Lawless said.

“I guess the big question is: why Sydney and Melbourne? These are the two markets where jobs growth has been the strongest, where unemployment the lowest, where economic conditions are generally much more frothy than any of the other markets around Australia.

“That’s probably the best explanation for why we’re seeing the two markets that are the most unaffordable amongst the capital cities the first responding to all these positive news announcements.”

Auction clearance rates in Sydney and Melbourne have been holding around 60% through June, with Adelaide performing strongly too. Both Melbourne and Sydney returned a preliminary auction clearance rate above 70% this week, however this will likely revise lower as final results are collected and fall in the high 60% range. Adelaide returned the strongest preliminary result amongst the smaller markets with 68.9% of auctions successful. These figures from CoreLogic reveal a substantial improvement compared to late 2018 when clearance rates were consistently in the low 40% range.

"Potentially we are seeing the first signs that the top end of Sydney and Melbourne's housing markets are leading the recovery trend," Mr Lawless said.

Nationally, housing market conditions continued to improve through June, with CoreLogic reporting a 0.2% fall in national dwelling values; the smallest month-on-month decline in the national series since March 2018.

Regional Victoria remains a solid housing market performer, with four of the top ten highest capital gains located in this region, including Shepparton, Warrnambool, Ballarat and Bendigo.