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How do dwelling values compare with previous highs?

 

 

Low mortgage rates, a swift economic recovery, which has spurred consumer sentiment, and low listing volumes have catapulted national housing values to new record highs. At the end of March, the CoreLogic national home value index increased a further 2.8%, placing values 5.6% above the previous market peak in October 2017. The combined value of Australian dwellings hit $7.9 trillion dollars over the month, according to CoreLogic. This cements residential property as an extremely large and important asset class.   

Comparing current capital city values with previous peaks adds some perspective to the current upswing – particularly in Perth and Darwin, where values remain substantially below their record highs from 2014. It also highlights the very different dynamics across capital cities – such as in the ACT, where dwelling values have hit a new record high every month for 19 months.

The following charts plot the change in capital city dwelling values from previous peaks, and the number of months it has taken for values to surpass the previous peak. The subsequent downturn and recovery trends vary, and are unpacked below. 

Brisbane

Brisbane dwelling values are sitting 6.5% above the previous peak, which was in April 2020. Market values saw a peak-to-trough decline of -0.9% through COVID-19. The decline lasted just 4 months, before Brisbane dwelling values recovered to a new record high by October 2020.

As with Melbourne, the recovery in the Brisbane market has been varied. While house values climbed 7.6% above the previous peak through March, which was reached in May of 2020, unit values remain -9.4% below the record high value, which was in March 2010.  Brisbane unit values are currently at similar levels as October 2007, reflecting a very affordable entry point to the market.

The weaker conditions across the unit sector are likely due to previously high levels of unit completions keeping values subdued, particularly in the later part of the 2010s. ABS dwelling completion data saw unit completions across Queensland rise 50.4% in the 5 years to September 2020, compared with a 17.4% uplift in house completions. However, strong internal migration flows to south-east Queensland, as well as other tailwinds for housing demand more broadly, has supported 5 consecutive months of growth in Brisbane unit values since November 2020.

Source: CoreLogic – Eliza Owen 12.April 2021