growth<\/a> was once again strongest in Sydney where values surged 1.7% over the course of the month, with prices now 6.7% higher than their January lows<\/span><\/p>\nBrisbane also performed strongly, with values climbing 1.3%, followed by Adelaide and Perth with a 0.9% rise and Melbourne with 0.7%. All the capital cities managed to see an increase in prices with the exception of Hobart, where property prices declined 0.3% for the month.<\/span><\/p>\nCoreLogic Research Director, Tim Lawless said a lack of available supply continues to be the main factor keeping upwards pressure on housing values<\/span><\/p>\n\n\u201cThrough June, the flow of new capital city listings was nearly -10% below the previous five-year average and total inventory levels are more than a quarter below average,\u201d Mr Lawless said. <\/span><\/p>\n\u201cSimultaneously, our June quarter estimate of capital city sales has increased to be 2.1% above the previous five-year average.\u201d<\/span><\/p>\n<\/blockquote>\nHe said that although housing values continue to record a broad-based upswing, the pace of growth across most capitals eased in June. <\/span><\/p>\n\u201cA slowdown in the pace of capital gains could be a reflection of a change in sentiment as interest rate expectations revise higher,\u201d he said.<\/span><\/p>\n\u201cHigher interest rates and lower sentiment will likely weigh on the number of active home buyers, helping to rebalance the disconnect between demand and supply.\u201d<\/span><\/p>\n![\"Change](\"https:\/\/blog.realestateinvestar.com.au\/hs-fs\/hubfs\/Blog\/Post%20Images\/Change%20in%20Dwelling%20Values%20Index%20Results%20as%20at%20June%2030%2c2023.png?width=755&height=230&name=Change%20in%20Dwelling%20Values%20Index%20Results%20as%20at%20June%2030%2c2023.png\")
<\/span><\/p>\nSource: CoreLogic<\/p>\n
Market conditions across regional Australia also remain steady, with values rising 0.5% in June to be 1.2% off their prior lows. However, there are now fewer people moving to the regions.<\/span><\/p>\nMr Lawless said after regional population growth boomed through the worst of the pandemic, internal migration trends have normalised over the past year, resulting in less housing demand across regional markets. <\/span><\/p>\n\u201cAdditionally, housing demand from overseas migration is skewed towards the capital cities rather than the regions,\u201d he said.<\/span><\/p>\nLack of supply<\/span><\/h2>\nTight levels of supply, continue to be the key driver of prices in the current market according to Mr Lawless.<\/span>\u00a0<\/span><\/p>\nHe said the number of capital city homes advertised for sale was almost -20% lower than at the same time last year and -26.4% below the average for this time of the year. <\/span><\/p>\nRegional listings also trended lower through the month, down -32.9% from the previous five-year average. <\/span><\/p>\n\u201cDespite low inventory levels, the estimated volume of home sales is roughly in line with the previous five-year average,\u201d Mr Lawless said.<\/span><\/p>\n\n\u201cCapital city homes sales were estimated to be 2.1% above the previous five-year average through the June quarter, while regional homes sales were – 8.9% below average levels.\u201d<\/span><\/p>\n<\/blockquote>\nHe said the recovery in home prices is occurring on relatively thin volumes. <\/span><\/p>\n\u201cAlthough homes sales are around average levels, available supply is well below.<\/span><\/p>\n\u201cIt is this disconnect between available supply and demonstrated demand that is driving housing values higher.<\/span><\/p>\n\u201cThe imbalance between supply and demand has seen selling conditions turn in favour of vendors rather than buyers.\u201d<\/span><\/p>\nRents slow<\/span>\u00a0<\/span><\/h2>\nConditions remain tight across the country for renters, but there are signs that things are slowly starting to improve.<\/span><\/p>\nMr Lawless said the national rental index increased a further 0.7% in June, still well above the pre-COVID decade average of 0.2%, but a continued deceleration and the smallest monthly rise since January 2023.<\/span><\/p>\nHe said the slowdown in rents can be seen in most cities and regional markets to different extents. <\/span><\/p>\n\u201cCanberra is the only capital to record a fall in rents over the past 12 months, down -2.8%, while declines in Hobart rents over the past two months have dragged the annual trend to just 1.3%,\u201d he said.<\/span><\/p>\n\u201cBoth these markets have seen a loosening in supply and increase in vacancy rates. <\/span><\/p>\n\u201cAlthough easing, the larger capitals continue to record stronger rental appreciation, especially across unit markets, where overseas migration and insufficient rental supply is continuing to place upwards pressure on rents.<\/span>\u00a0<\/span><\/p>\nUncertain outlook<\/span>\u00a0<\/span><\/h2>\nDespite prices trending higher, Mr Lawless said the outlook for property remains uncertain given so much is dependent on what happens with interest rates.<\/span><\/p>\n\u201cForecasts on where the cash rate will land and how long it will stay elevated vary, but it\u2019s likely there is at least one more rate hike to come, potentially more,\u201d he said.<\/span><\/p>\n\u201cIt\u2019s hard to imagine the recent pace of growth in housing values being sustained while sentiment is close to recessionary lows and the full complement of borrowers are yet to experience the rate hiking cycle in full.<\/span>\u00a0<\/span><\/p>\nMr Lawless said there was also increased risk, given the huge number of borrowers who are about to roll off their fixed rate loans and onto much higher variable rates.<\/span><\/p>\nWhile credit conditions also remain restrictive to new buyers.<\/span>\u00a0<\/span><\/p>\n\u201cAs we saw through the periods of tighter macro-prudential policies and higher serviceability assessments, credit availability plays an important role in housing markets, so further reductions in available credit will likely weigh on buyer demand,\u201d Mr Lawless said.<\/span>\u00a0<\/span><\/p>\nMr Lawless said low inventory levels have arguably been the most important factor placing upwards pressure on housing prices. <\/span>\u00a0<\/span><\/p>\n\u201cA change in the supply dynamic could become evident in spring when the flow of listings would typically ramp up,\u201d he said.<\/span><\/p>\n\u201cWe could also see more listing flow onto the market if mortgage stress becomes widespread.\u201d<\/span><\/p>\n![\"New](\"https:\/\/no-cache.hubspot.com\/cta\/default\/435410\/4be3765b-9cf4-43ae-8fae-038919f9fa76.png\")
<\/a><\/span><\/span><\/span><\/p>\n<\/div>\n