There's bad news for prospective homebuyers looking to pick up a bargain in Sydney's affluent eastern suburbs or Melbourne's inner east.
Following a relatively short-lived downturn, prestige housing markets in Australia are picking up momentum - a sign that the broader market is set for stronger growth following the Reserve Bank's first rate cut in more than four years.
The upper quartile of the housing market tends to act as a bellwether and swung from a 0.3 per cent decline in January to a 0.2 per cent rise in February, says CoreLogic economist Kaytlin Ezzy.
"If this momentum continues, the quarterly change in upper quartile values could turn positive and potentially outperform the lower quartile and middle market for the first time since August 2023," she said.
The northern end of Sydney's eastern suburbs, including the ritzy locales of Point Piper, Double Bay and Vaucluse, recorded a 250-basis point turnaround from a 0.5 per cent fall in January to a 2 per cent lift.
Meanwhile, Stonnington in Melbourne's inner east, which includes the well-heeled suburbs of Prahran, South Yarra and Toorak, experienced a 264-basis point recovery.
CoreLogic research shows the higher end of the market has historically been the most sensitive to changes in interest rates.
"It is possible that these kinds of markets have a stronger response to cash rate falls because people generally need more finance to buy into them," Ms Ezzy said.
"However, the RBA board minutes and statement in February were fairly hawkish despite the rate cut, so there is some uncertainty as to whether the recent momentum will continue.
"For example, the Sydney clearance rate did lose a little exuberance in the week ending 2 March, with a final result of 64.5 per cent, down from a recent high of 67.2 per cent a couple of weeks prior."
While the market has responded strongly to the RBA's rate cut in February, the trend was already strengthening as expectations for a cut grew prior to the decision.
"This suggests sentiment was also at play," Ms Ezzy said.
"If buyers are out in the market expecting they can access more finance, this may have contributed to a strong market response."
