The CoreLogic Hedonic Home Value Index results for June 2019 show Sydney and Melbourne house prices have risen for the first time since 2017.
Home Value Index
CoreLogic is a research firm that monitors residential and commercial property prices across Australia. The Home Value Index combines recent sales data with information about the attributes of individual properties.
According to CoreLogic, this allows them to distinguish between price changes due to property attributes and price changes due to underlying residential property conditions.
What Were The Results?
The June 2019 results show that dwelling values increased 0.1% in Sydney and 0.2% in Melbourne for the first time since Sydney’s peak in July 2017 and Melbourne’s peak in November 2017.
While Sydney, Melbourne and Hobart (0.2%) prices increased, all other major cities fell, with the biggest declines in Darwin and Canberra, both down 0.9%.
Overall, the national result showed a decline of 0.2% in June, the best result since March 2018.
CoreLogic head of research Tim Lawless said it’s an early sign that lower mortgage rates and improved sentiment are starting to take effect.
What Does It Mean For ASX Investors?
For ASX investors, a rising residential property market would help banks like Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB). It could also help real estate investment trusts (REITs) with exposure to residential property like Stockland Corporation Ltd (ASX: SGP) or Mirvac Group (ASX: MGR).
However, more data is needed to determine whether prices are actually going to start climbing again. Recent RBA data showed that housing credit growth has slowed to the lowest level recorded in more than 40 years.
So, while CoreLogic data suggests things are looking up, RBA data seems to disagree. In other words, there are a lot of mixed messages right now with housing data.
I’m not in a rush to jump into companies that are heavily exposed to residential real estate. Until there is more data, I’d rather stick to the companies mentioned in the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.