National dwelling values rose by 0.6% in July, with the rate of growth holding firm relative to the prior two months, according to Cotality's latest Home Value Index.
That marks the sixth straight month of gains, with the new momentum occurring around the first rate cut in February.
"At the national level, the pace of growth in housing values is no longer accelerating," said Cotality's research director, Tim Lawless. "Rather, we have seen growth rates holding a little above half a percent from month to month since May as the opposing influence of low supply, falling interest rates and rising confidence run up against affordability constraints and lingering uncertainty."
The Chairman and Owner of Century 21 Australasia, Charles Tarbey said that recent growth numbers suggests that the property market is healthy, "Over the past two years there have been many that predicted a downward movement in property prices. That a large downturn was inevitable."
"However, on the coal face we could see that there was still a lot of buyers and a group of buyers sitting on the sideline that couldn't borrow what they required to purchase.
"When interest rates begun moving lower many in this group became active buyers which further supported the market.
"I believe that supply and demand are now reasonably balanced, and we may be entering a period of sustainable growth," Mr Tarbey said.
Every capital city recorded a rise in dwelling values through the month, led by Darwin with a solid 2.2% rise, followed by Perth, up 0.9%. At the softer end of the growth tables are Hobart (+0.1%), Melbourne (+0.4%) and the ACT (+0.5%).
"The mid-sized capitals are also once again standing out, especially Perth, where the monthly pace of gains has accelerated to the fastest rate of growth since September last year," Mr Lawless said.
The positive trend in housing values is supported by persistently low inventory levels, with national listings tracking -19% below the previous five-year average for this time of the year. At the same time, Cotality's estimate of annual sales is tracking about 1.9% above the previous five-year average. The imbalance between available supply and demonstrated demand has supported auction clearance rates, which have been tracking slightly above the decade average since mid-May.
Charles Tarbey commented that people often overlook the fact that property prices are a lot higher than they have ever been which should make it harder to find qualified buyers.
"Despite low stock levels and higher prices, demand appears to still be exceeding supply."
The rate of growth in house values is once again outpacing gains across the unit sector. The past three months have seen national house values rise by 1.9%, adding approximately $16,700 to the median value. In comparison, unit values are up a smaller 1.4% or roughly $9,700 on the median value. This may be because more expensive markets tend to have higher interest rate sensitivity, with higher-income households seeing a bigger boost to borrowing capacity. This usually leads to house values outperforming units during housing market upswings.
The difference between the national median house and unit value is at a record high, with a 32.3% difference between the two broad housing types, or approximately $223,000 in dollar terms.
Charles Tarbey believes that this gap has the potential to keep increasing, "There may be some easing of red and green tape restrictions in some markets. In NSW, planning rules are being changed to allow for medium density housing to go from three to six levels. You'll always likely have strong demand for houses as they typically have more space – and more green space."
"While it's important to remember that apartment prices have also surged, it would be unsurprising to see the price gap between houses and apartments continue to grow due to supply and demand factors."
Mr Lawless noted: "Such a wide difference comes amid ongoing affordability constraints and a lack of newly built multi-unit housing supply, which seems counter-intuitive. Clearly, demand preferences are still weighted towards detached housing options despite the substantially lower price points available across the unit sector."
The combined regional markets (1.7%) are no longer outperforming, with the rolling quarterly gain once again favouring the combined capitals (1.8%). The stronger capital city trend comes after nine months where the quarterly trend rate of growth has been stronger across regional Australia.
The stronger capital city trend isn't evident everywhere, with regional markets in Vic (1.4%), Qld (2.5%) and SA (2.0%) continuing to outperform their capital city counterparts (1.2%, 2.3% and 1.5% respectively).
Charles Tarbey said that property market still has the potential to outperform many other asset classes that are more prone to 'boom-and-bust' scenarios.
"It's always been my view that the last thing a person or family will want to sell is their home and this provides a degree of stability in the property market that may not be evident in other markets.
"If I was an active investor at present, I'd be starting my search looking at the Australian markets that haven't been keeping up with the pace of growth seen in other markets. There may be value laden purchases to be had," Mr Tarbey concluded.