Cotality’s national Home Value Index (HVI) increased by 0.7% in August, marking the most significant monthly lift since May of the previous year. This momentum also drove annual growth higher for the second consecutive month, reaching 4.1%.
Since the February rate cut, the growth cycle has steadily accelerated, underpinned by enhanced borrowing capacity, increases in real wages, greater market confidence, and a likely intensifying sense of urgency among buyers as listed stock remains constrained.
“Once again we are seeing a clear mismatch between available supply and demonstrated demand placing upwards pressure on housing values. The annual trend in estimated home sales is up two percent on last year and tracking almost 4% above the previous five-year average. At the same time, advertised supply levels remain about -20% below average for this time of the year," said Cotality Australia’s research director, Tim Lawless.
Auction clearance rates climbed to 70% in late August—the highest level recorded since February of the previous year—while competition among vendors remains moderate due to persistently low levels of advertised stock.
“We are starting to see the usual start of spring upswing in new listings coming to market, but from a low base. A pick up in the flow of stock coming to market through spring will be good news for buyers who generally have limited choice at the moment,” Mr. Lawless said.
Although residential property values are increasing in the majority of regions, the current rate of growth remains comparatively restrained relative to previous market upswings. For perspective, the national index recorded a peak monthly gain of 3.1% in March 2021 during the pandemic, while the recovery that began in early 2023 accelerated quickly, reaching a 1.3% monthly high in May 2023.
“I would be surprised if we saw the monthly rate of change in the national HVI getting anywhere near these earlier cyclical peaks, given how stretched housing affordability has become. What is more likely is that home values will rise at a more sustainable pace, with demand dampened by affordability constraints, more normal rates of population growth and cautious lending policy. While interest rates are falling, the cash rate is still 350 basis points higher than the 0.1% low that underpinned growth in the pandemic," Mr. Lawless said.
Growth remains geographically widespread, with nearly all regions recording an increase in values over the past month. The exception continues to be Tasmania, where Hobart experienced a -0.2% decline. The mid-tier capitals are leading the market, as Brisbane (+1.2%) and Perth (+1.1%) achieved the strongest monthly increases, closely followed by Adelaide with a 0.9% uplift. Darwin also delivered robust performance, posting a 1.0% rise in August and driving values 10.8% higher in the first eight months of the year—the largest year-to-date advance among the capital cities.
“It seems that investors are willing to look through the volatile history of Darwin housing trends, with investors attracted to the low price points and high yields. Lending to this segment has more than doubled over the past year,” Mr. Lawless said. “Additionally, listings are extraordinarily low, down about 50% on the five-year average.”