Sydney home values slip in October as market cooldown continues

Source: CoreLogic

CoreLogic’s national Home Value Index (HVI) recorded a 0.3% rise in October, the 21st month of growth since the cycle commenced in February last year.

As the market cools, annual growth in national home values has continued to ease, reducing to 6.0% over the 12 months ending October, down from a recent peak annual growth rate of 9.7% in February.

CoreLogic’s research director Tim Lawless notes that the stronger performance across the more affordable end of the market is a consistent theme across the capital cities.

“A combination of less borrowing capacity and broader affordability challenges, as well as a higher-than-average share of investors and first home buyers in the market is the most likely explanation for stronger conditions across the lower value cohorts of the market."

While the mid-sized capitals are still leading the pace of value growth, these markets are also losing momentum. Brisbane’s monthly gain of 0.7% was the lowest since July. Slower growth in home values has been accompanied by a rise in advertised stock levels.

“Despite the rise in listings across the mid-sized capitals, Perth, Adelaide, and Brisbane is still seeing advertised stock levels more than -20% below the five-year average for this time of the year. These markets remain well and truly in favour of sellers, although the balance is starting to gradually improve.”

Alongside the rise in advertised supply, the number of home sales looks to be fading. Estimates for capital city sales activity over the three months ending October were down -7.5% from three months earlier and -1.6% lower than at the same time last year. With higher levels of advertised supply and less purchasing activity, selling conditions have loosened.

National rents rose by 0.2% in October, a subtle bounce back from the weaker growth over the previous three months. Annual rental growth has dropped to 5.8%, the smallest annual rise in the national rental index since the 12 months ending April 2021.

Weaker rental trends in the unit sector have slowed rental growth, with rents slipping across the unit markets of Melbourne (-0.4%), Brisbane (-0.3%), over the three months ending October 24.

Investing in housing remains popular despite the diminishing yield profile. We are still seeing investors leading the upswing in mortgage related activity with the value of lending up 34.2% in the past year, more than double the increase in owner-occupier lending at 16.8%.

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