Sydney surprises with unexpected price gain in February

February saw a surprise twist in Sydney where dwelling prices, amid the downturn, recorded a monthly uptick.

CoreLogic’s latest Home Value Index report showed a sharp reduction in the rate of the overall decline in dwelling prices, with the national figure only falling at a marginal rate of 0.1% over the month.

Sydney’s 0.3% gain helped pull the prices up in February but all capital cities, save for Darwin, recorded an ease in decline.

CoreLogic research director Tim Lawless said the apparent stabilisation of values over the past month coincides with consistently low supply and an increase in auction take-up.

“The past four weeks have seen the flow of new capital city listings tracking 17.0% lower than a year ago and 11.9% below the previous five-year average,” Mr Lawless said.

“This trend towards a below average flow of new listings has been evident since September last year, coinciding with a loss of momentum in the rate of value decline.”

Over the month, regional markets posted a bigger decline at 0.3% compared to the combined results of capital cities.

However, it is important to factor in the surprise upside in Sydney as a reason for the overall superior performance of state capitals. This means that the weaker regional outcome was not due to a larger fall in regional market values.

In fact, each of the broad rest-of-state regions, apart from New South Wales, recorded a monthly outcome that was inline or stronger relative to their capital city counterparts.

In terms of auction activity, Sydney also produced strong results, with its clearance rate hitting beyond 70% in the week ending 19 February — the last time this level was seen was exactly a year ago.

Given these latest developments in house price growth, it is safe to say that the cycle has reached its bottom?

“Considering the RBA’s move to a more hawkish stance at the February board meeting, along with an expectation for a weaker economic performance and a loosening in labour markets, there is a good chance this reprieve in the housing downturn could be short-lived,” Mr Lawless said.

“We also have the fixed-rate cliff ahead of us; arguably the full impact of the aggressive rate hiking cycle is yet to play out.”

-

Photo by Tourism Australia on Canva.