Real estate prices may have hit the bottom

After falling by 9.1% between May 2022 and February 2023, housing values look to have bottomed out, posting a second consecutive monthly rise, says Corelogic.

According to CoreLogic’s national Home Value Index (HVI) real estate values increased by half of one percent in April, following a 0.6% lift in March to be 1% higher over the past three months.

The firm’s research director, Tim Lawless, says: “Not only are we seeing housing values stabilising or rising across most areas of the country, a number of other indicators are confirming the positive shift.

“Auction clearance rates are holding slightly above the long run average, sentiment has lifted and home sales are trending around the previous five-year average.”

The more positive trend in housing values comes amid a worsening imbalance between supply and demand.

“A significant lift in net overseas migration has run headlong into a lack of housing supply,” says Lawless.

“While overseas migration would normally have a more direct correlation with rental demand, with vacancy rates holding around one percent in most cities, it’s reasonable to assume more people are fast tracking a purchasing decision simply because they can’t find rental accommodation.

“Many prospective vendors have stayed on the sidelines through the downturn, keeping inventory at below average levels and providing sellers with some leverage at the negotiation table.”

Lawless says the growing expectation the rate hiking cycle is over, or nearly over, following a sharp decline in values was another likely factor supporting housing demand.

“This could be contributing to a broader perception that the market has bottomed out, and for those attempting to time the market, that it is considered to be a good time to buy,” he says.

“As interest rates stabilise there is a good chance consumer sentiment will improve, bolstering housing market activity from both a purchasing and a selling perspective.”

Lawless says regional NSW (-0.3%) and regional Victoria (-0.4%) were the only ones to record a fall in housing values over the month. However, he adds that the quarterly trends in these regions are on a clear trajectory towards a stabilisation in values.

“Although housing conditions are looking more positive, values across most regions remain well below their recent cyclical highs,” he says.