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Australia’s housing market growth seemed to have regained strength in August but what could be supporting it in the first place despite unfavourable market conditions?

CoreLogic head of research Eliza Owen said recovery trend in values comes despite a cost-of-living crisis, low consumer sentiment levels and four increases in the cash rate so far this year amid the fastest rate hiking cycle on record.

“There are a few factors that may explain why housing values have continued to rise, despite seemingly unfavourable growth conditions, including net overseas migration, use of savings and equity, and constrained supply,” she said.

The collective worth of Australian housing bounced back to $10trn by the end of August — this marks the first time the total estimated value hit double digits since June 2022.

For context, the national recovery in home values commenced in March 2023, with values increasing 4.9% through to the end of August.

This increase has offset around half of the preceding downturn between April 2022 and February 2023 when national home values declined 9.1% from peak to trough.

The combination of returning overseas arrivals and a drop in overseas departures pushed the demand for housing, which resulted in elevated home prices.

Over the previous year, departures from Australia were down about 25% on the pre-COVID average, while overseas arrivals went up slightly higher than the levels seen in 2019.

“Combined with a persistently low average number of people per dwelling across the capital cities, this is pushing the need for housing higher, and may be contributing to more competitiveness for properties on the market, especially considering rental vacancy rates remain around record lows,” Ms Owen said.

The constrained supply is also a significant factor — total listings volumes remained low, even with an increase in new listings ahead of the spring-selling season.

Over the four weeks ending 3 September, total listings across Australia were sitting at around 136,000, which is 23.4% lower than the previous five-year average.

Ms Owen said another big contributor is the use of savings, profit, and equity from previous homeownership that is being used towards property purchases, as opposed to more borrowing.

“This would also help to explain why home values have continued to rise in the past few months, as ABS reported a fall in the value and volume of lending through June and July,” she said.

However, Ms Owen said it is uncertain how long households can draw on savings to support purchases, given the fall in the household saving ratio, which measures the ratio of net saving to net disposable income.

Figures from the Australian Bureau of Statistics show a decline in the household saving ratio to 3.7% amid high inflation and debt costs.

Overall, Ms Owen said while there is a consistent rise in house values over the past six month, the outlook for the housing market remains highly uncertain.

“While there is a growing expectation that the RBA board is done hiking the cash rate, borrowing remains constrained by a relatively high serviceability buffer,” she said.

“Economic performance is also set to unwind, and while this is good news for the inflation and cash rate trajectory, a rise in unemployment may create a higher degree of risk for mortgage serviceability.”

“CoreLogic is expecting some heat could come out of the recent recovery trend toward the end of this year, while a more robust recovery in housing values will be limited until credit conditions loosen.”

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
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5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.14% p.a.
6.16% p.a.
$2,434
Principal & Interest
Variable
$0
$250
60%
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5.95% p.a.
5.95% p.a.
$2,385
Principal & Interest
Variable
$0
$0
90%
5.94% p.a.
5.95% p.a.
$2,383
Principal & Interest
Variable
$0
$0
90%
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .

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Photo by Niphon subsri on Canva.

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