Property research group CoreLogic’s Home Value Index found that national dwelling values have risen 2.9 per cent over the last three months, a rise of just under 1 per cent per month.
Should values continue to rise at this rapid pace, it could take just six months for national home values to return to their record highs of mid-2017.
While national home values still currently sit at 5.7 per cent below their peak, CoreLogic head of research Tim Lawless foresees a quick recovery, with losses experienced over the last two years to be recouped as early as April.
According to Mr Lawless, Melbourne will likely see a return to peak market prices before the rest of the country, perhaps even as early as January.
Melbourne’s prestigious Inner East has experienced much faster rates of growth, as values increased 8.3 per cent over the last three months, with Mr Lawless anticipating a new valuation benchmark to be set in this region as early as the end of this month.
Brisbane, which didn’t experience as harsh a correction as other capital cities, is due to see meaningful recovery within four months, if values continue to grow at the same pace as the last quarter.
Sydney had a significantly sharper correction, with values falling 14.9 per cent from peak to trough, and values still 10.4 per cent below their peak. However, Mr Lawless forecasts Sydney’s prices to return to their peak within six months.
Adelaide will experience a much slower recovery, according to CoreLogic, with current values rising just 0.1 per cent in the last quarter.
While values only fell 1.2 per cent since their peak in the SA capital, the slow rate of increase is likely to result in a prolonged recovery.
Elsewhere, Hobart and Canberra appear to be largely unaffected by the national downturn, with both markets currently at their peak.
On the other end of the spectrum, Darwin and Perth continue to see falls in property values, making these areas popular for new entrants into the market due to their affordability.
A recovering national housing market should provide some economic stimulus for home owners, according to Mr Lawless, but increasing prices also raise concerns about increasing affordability issues for first home buyers.
“A recovery in the housing market should help to provide some support for Australian economic conditions, boosting household wealth, which will potentially lead to improved confidence and a greater willingness from households to spend while also supporting the residential building and development sector where dwelling approvals have tanked,” Mr Lawless said.
“On the flipside, for non-homeowners, a recovery in housing values implies the affordability dividends provided by the recent housing downturn are now a thing of the past.
“With housing values rising rapidly in some areas, we could see less first home buyer participation in the market as affordability pressures start to dampen activity across this important sector of the market.”