A fear of missing out (FOMO) is boosting prices for housing, with national values rebounding 1.2 per cent over May.
CoreLogic’s home value index recorded the strongest growth last month since November 2021, with Sydney, Brisbane and Perth leading the way, figures published on Thursday reveal.
The rebound, which started in March and has accelerated, is driven by a surge in demand for housing post-COVID combined with historically low numbers of market listings.
An element of FOMO is creeping into the market as prospective buyers start to see the market turning up, CoreLogic research director Tim Lawless said.
“With such a short supply of available housing stock, buyers are becoming more competitive,” he said.
“Auction clearance rates have trended higher, holding at 70 per cent or above over the past three weeks. For private treaty sales, homes are selling faster and with less vendor discounting.”
Cities below peaks
Sydney has led property cycles since the pandemic years and that is continuing, with median values rising 1.8 per cent in May to $1.052 million.
Values have risen 4.5 per cent over the past three months, but are still down 8.2 per cent in annual terms.
Melbourne, which alongside Sydney saw prices fall most steeply in 2022, saw median values rise 0.9 per cent in May to $755,781, while Brisbane was up 1.4 per cent to $713,939.
All three of Australia’s largest markets are still down in annual terms following steep property price falls last year following the Reserve Bank’s interest rate hikes.
In Sydney, home values are 9.6 per cent below their peak (January 2022), while they’re 9.4 per cent lower in Brisbane (June 2022) and down 8.2 per cent in Melbourne (February 2022).
But what’s surprised many experts is that property prices have started rebounding rapidly despite those rate hikes continuing – with yet another RBA increase anticipated next week.
It has been explained as a classic supply and demand story, with population growth due to immigration and a relative shortage of available properties on the market.
“Advertised listings trended lower through May with roughly 1800 fewer capital city homes advertised for sale relative to the end of April,” Mr Lawless said.
“Inventory levels are -15.3 per cent lower than they were at the same time last year and -24.4 per cent below the previous five-year average for this time of year.”
Premium markets
The property rebound has been most pronounced in premium markets that had some of the largest falls over the past year, but regional areas are also recovering.
Median values across regional Australia have risen 0.8 per cent since March, and were up 0.5 per cent in May.
“Although regional home values are trending higher, the rate of gain hasn’t kept pace with the capitals,” Mr Lawless said.
“Over the past three months, growth in the combined capitals index was more than triple the pace of growth seen across the combined regionals at 2.8 per cent and 0.8 per cent respectively.”
Perth is a prime example, with median prices returning to a record $580,023 after bottoming in February.
Values across Perth were 1.3 per cent higher in May, up 2.4 per cent on the quarter.
