Bellweather markets suggest property recovery on the way
Turnaround of 250 basis points in exclusive property markets during February suggests a housing sector recovery is already happening.
HIGH-END ‘bellweather’ markets showed strong growth in February, pointing to renewed momentum and an early indicator of a property sector recovery.
Homes in the top quarter price bracket rose 0.2% in February, following a -0.3% fall in January.
The lower quarter outperformed in comparison, rising 0.4% in February following a flat result in January.
The monthly change in capital cities’ most expensive 25% of values has seen the sharpest turnaround in growth compared to last month, CoreLogic Economist Kaytlin Ezzy said.
“The upper 25% of values in Melbourne, Sydney and Hobart – which our research shows have historically been some of the most sensitive to rate changes – recorded the largest Improvements,” she said.
“The top quartile is the one to watch as they tend to be a bellwether for broader market recoveries in those cities.”
“If this momentum continues, the quarterly change in upper quartile values could turn positive and potentially outperform the lower quartile and middle market for the first time since August 2023.”
Sydney and Melbourne houses and units generally had the most to gain from a reduction in interest rates and that appears to be reflected in February’s data, Ms Ezzy said.
“In Sydney and Melbourne, but also Hobart, many of the markets with a solid response to rate reductions are also seeing values well below their peak under recent interest rate rises, so easier access to credit may trigger a recovery trend in these markets.”
In Sydney, the prestige suburbs that include Point Piper, Double Bay and Rose Bay – grew 2.0% month on month after falling -0.5% in January. That marks a 250 basis-point turnaround.
Ms. Ezzy said these markets have traditionally responded strongly to changes in financial conditions.
In Melbourne, the biggest turnaround in capital growth occurred in the Stonnington East, where the value change lifted from a -1.9% drop in January to a 0.8% lift in February – or a 264 basis point lift in performance.
Other high-end markets like Manningham East, Bayside and Glen Eira also showed a strong turnaround.
Ms. Ezzy said that overall the market has had a strong response to the February rate cut, with the daily trend showing a material Improvement in the Home Value Index prior to the cut.
“This suggests sentiment was also at play,” she said.
“If buyers are out in market expecting they can access more finance, this may have contributed to a strong market response.”
