Home values are now firmly on the road to recovery, with new data showing dwelling values were up 1.2 per cent over the month of January.
According to RP Data’s latest Home Value Index, Australia’s combined capital cities recorded a 1.2 per cent improvement last month, negating the 1.2 per cent drop in values recorded over the final quarter of 2012.
Since bottoming out in May 2012, dwelling values across the combined capital cities have recovered by 3.1 per cent.
Year-on-year results have now moved firmly into positive territory, with capital city dwelling values 1.8 per cent higher over the 12 months ended January 31.
Every capital city except Melbourne recorded an increase in dwelling values over the past 12 months.
The gains in January were mostly focused within the Brisbane, Sydney and Perth markets where values were up 2.0 per cent, 1.8 per cent and 1.7 per cent respectively.
Conditions across the Melbourne and Adelaide housing markets remained relatively subdued, with dwelling values rising by 0.2 per cent and 0.4 per cent respectively.
According to RP Data’s research director, Tim Lawless, housing market conditions have started the year on a strong footing.
“These strong January results are likely to have seen some upwards seasonal bias. However, the housing market has been on a clear recovery trend since June last year. Capital gains aren't likely to remain this high over the coming months; however, we are likely to see the recovery trend continue through 2013,” he said.
“Despite improving market conditions in January, dwelling values across the combined capital cities remain 4.6 per cent below their 2010 peak.
“The latest housing market data add weight to the argument that interest rates may be at the bottom of the cycle. The Reserve Bank will be watching the performance of the housing market closely, and the positive trend in housing values will dampen calls for further interest rate cuts.”