The housing downturn seems to have come to a halt in February, at least on monthly terms, as property prices across the country slightly increased.
PropTrack’s Home Price Index posted a 0.18% growth in February, driven by the 0.26% gain reported across capital cities.
Prices bounced in every capital city, except in Hobart where prices dropped 0.29%. Adelaide and Sydney posted the highest growth in home prices at 0.44% and 0.36%, respectively.
PropTrack senior economist Eleanor Creagh said while the interest rate hikes continued to dampen the overall sentiment of buyers, there remained sustained demand amid low supply levels.
“These dynamics have been influenced by the availability of properties for sale, with lower stock levels underpinning home prices,” she said.
“The limited stock available for sale has led to a pickup in competition among potential buyers, insulating home values.”
This, however, was not the case in Hobart, where total listings were up more than 30% compared to the previous five-year average.
Overall, while home prices have already fallen from their peak in most markets, they are still 29.4% above the pre-pandemic levels.
Currently, sellers in market are able to benefit from low competition with other vendors. Ms Creagh said the limited level of properties available for sale is “putting a floor” under home prices, concentrating buyer demand.
“The longevity and depth of the current downturn will be influenced by the level of supply, as well as the trajectory of interest rates, in the months ahead.”
Still, Ms Creagh said it is too early to call an end to the downturn.
“While interest rates have been the primary driver of home price falls to date, there are factors beyond interest rates at play,” she said.
Further rates hikes will weigh on borrowing capacities further, which could, in turn, impact demand.
“However, if supply remains limited, this will help counter the downward pressure on home prices. Positive demand drivers stemming from the shortages in rental supply and rebound in international migration also remain.”
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