Housing Market Rebounds in February: Melbourne and Hobart Lead the Recovery

Source: CoreLogic

After three months of modest decline, Australia’s housing market has turned a corner, with CoreLogic’s national Home Value Index (HVI) recording a 0.3% rise in February. This subtle yet broad-based recovery suggests that market sentiment is improving, even as borrowing capacity remains constrained.

Melbourne and Hobart Lead the Gains

Among capital cities, Melbourne and Hobart posted the strongest monthly increases at 0.4%, marking a significant shift for these markets, which had previously been among the weakest performers. For Melbourne, this growth is particularly notable, as it breaks a streak of ten consecutive months of falling home values.

In contrast, the mid-sized capitals—Brisbane, Perth, and Adelaide—have relinquished their position as the nation’s fastest-growing markets. Although these cities continued to post gains (ranging from 0.2% to 0.3%), their growth was outpaced by Melbourne and Hobart. While Adelaide and Brisbane remain leaders in rolling quarterly growth, up 1.2% and 0.9% respectively, Perth has seen a sharper slowdown, with downward revisions dragging its quarterly change to just 0.3%.

Supply Constraints Supporting Prices

One key factor underpinning the market’s resilience is a slowdown in the number of freshly advertised ‘for sale’ listings. Over the four weeks leading up to February 23, new listings in the combined capitals were 4.7% lower than a year ago and 1.5% below the five-year average. Although total advertised supply is marginally higher than last year (up nearly 1%), it remains 7.9% below the previous five-year average.

According to CoreLogic’s research director, Tim Lawless, this reduction in new stock, coupled with improved buyer sentiment and the prospect of lower interest rates, is likely exerting upward pressure on prices.

Outlook for the Housing Market

The February data marks a potential turning point in the housing market, with renewed momentum suggesting further gains in the coming months. While borrowing capacity remains constrained, rising confidence, limited new listings, and expectations of lower rates could sustain this recovery. Investors and prospective buyers will be watching closely as market conditions continue to evolve.

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