Cotality’s national Home Value Index climbed 0.7% in August—the largest monthly increase since May last year—lifting the annual growth rate to 4.1% for a second consecutive monthly gain.

Since the February rate reduction, market momentum has steadily increased, driven by enhanced borrowing power, real wage growth, improved buyer confidence, and heightened urgency amid persistently low advertised stock levels.

“Once again we are seeing a clear mismatch between available supply and demonstrated demand placing upwards pressure on housing values”, said Cotality Australia’s research director, Tim Lawless.  

“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.”

Vendors are entering spring with a distinct advantage.

Auction clearance rates reached 70% in late August—the highest level since February last year—while limited advertised stock continues to keep competition among vendors relatively subdued.

“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 property values are increasing in most areas, the rate of growth remains restrained compared to previous cycles. At the peak of the pandemic, national index growth reached 3.1% in March 2021, while the upswing beginning in early 2023 accelerated to a high of 1.3% 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.

The upward trend in home values spans nearly all regions this month, with Tasmania as the notable exception—Hobart recorded a modest decline of -0.2%. Among the mid-sized capitals, Brisbane (+1.2%) and Perth (+1.1%) led the gains, closely followed by Adelaide at 0.9%. Darwin posted a robust 1.0% monthly rise, taking values up 10.8% since January—the strongest year-to-date performance among the capitals.

“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. Additionally, listings are extraordinarily low, down about 50% on the five-year average." Mr. Lawless said.