Australian Property Market Shows Signs of Recovery in February

In February, according to CoreLogic's National Home Value Index, the Australian real estate market recorded a 0.3% overall increase. This marks a recovery after a brief three-month downturn, narrowing the total national home value decline to -0.4%. While the growth was modest, it was widespread—except for Darwin (-0.1%) and regional Victoria (flat), all other capital cities and regional markets recorded an increase in property values.

Market Trends Analysis—A Turning Point Emerges
The February data reveals that the real estate markets in Sydney and Melbourne, the two largest cities in Australia, have begun to recover, with the rebound largely driven by the high-end property sector. These premium markets, which had previously experienced the sharpest declines, are now leading the recovery. Melbourne and Hobart posted the highest monthly growth rates at 0.4%, with Melbourne ending a streak of ten consecutive months of declining home values.

In contrast, mid-sized cities such as Brisbane, Perth, and Adelaide saw slower growth, with monthly increases ranging from 0.2% to 0.3%. However, on a quarterly basis, Adelaide and Brisbane remain leaders, recording growth rates of 1.2% and 0.9%, respectively. Perth has experienced a more significant slowdown, with quarterly growth limited to just 0.3%, reflecting recent market adjustments.

Regional Markets Show Strong Momentum
Compared to the capital cities, regional markets in Australia demonstrated more robust performance. In February, regional property values increased by 0.4%, with a rolling quarterly gain of 1.0%. However, there were variations across regions, with Sydney, Melbourne, and Hobart outpacing their regional counterparts.

Improved Buyer Sentiment and Constrained Supply
Tim Lawless, CoreLogic's Research Director, pointed out that the improvement in market conditions is primarily driven by enhanced buyer sentiment rather than an actual increase in borrowing capacity. In February, expectations of rate cuts became more solidified, encouraging buyers to become more active, particularly in the premium market. This uplift in sentiment was also reflected in auction clearance rates, which returned to long-term average levels across key markets.

Additionally, a reduction in the supply of newly advertised listings has exerted upward pressure on property prices. Over the four weeks to February 23, the number of new listings was 4.7% lower than the same period last year and 1.5% below the five-year average. Although total advertised supply was approximately 1% higher than a year ago, it remained 7.9% below the five-year average. This imbalance between supply and demand, especially as buyer activity picks up, could further support price growth.

Key Takeaways for Investors
Overall, the Australian real estate market is showing signs of a gradual recovery, particularly in major cities and regional markets, presenting new opportunities for investors. The rebound in premium markets and the constrained supply of properties highlight the attractiveness of the current market environment for potential buyers. Whether you are a long-term investor seeking capital growth or a high-net-worth individual looking to diversify your portfolio, now may be an opportune time to re-evaluate the Australian property market.