Feb House Prices Take A Breather, Correction Unlikely Over

In February Australian CoreLogic house prices fell only 0.1% m/m to be down 9.2% y/y and 9.7% off of the April 2022 peak. Since that peak, prices had averaged declines of 1.1% and so the February result is a big improvement despite the RBA hiking 325bp. Lower supply as people wait for a better time to sell may have helped. Given rising rates, significant upcoming refis, high household indebtness and 24.1% rally during Covid, the correction likely has further to go.

• The 5-city aggregate posted its best monthly read since the last rise in April 2022. Sydney actually saw prices increase in February for the first time since January 2022. They rose 0.3% m/m to be down 13.4% y/y implying a tentative trough in January at -13.8%. Prices in Melbourne fell 0.4% m/m and -9.6% y/y after -1.1% and -9.3% the previous month. The loss of downward momentum was seen across most cities.
• CoreLogic said that the slowdown in the correction has “coincided” with a pickup in auction clearance rates and a low advertised supply. In the last 4 weeks, new capital city listings are down 17% y/y and 11.9% below the 5-year average. Listings have been below average since September.
• The upper quartile of home prices drove the February improvement, especially in Sydney, but the lower quartiles also saw some stabilisation.
• See CoreLogic report here.