Brisbane and the regions recorded a 0.5 per cent increase in dwelling values in September.

CoreLogic’s Tim Lawless said September marked a striking turn in housing market sentiment. Consumer confidence increased, new listings rose, and six of the eight capital cities recorded a rise in home values over the month.

“We aren’t seeing any signs of a rise in distressed listings or stock starting to pile up in the market,” he said.

“In fact, the opposite seems to be true, where new listings are being absorbed by the market faster than the rate at which they are being added.

“This trend will be important to monitor over coming months as fiscal support tapers and the financial situation of borrowers taking a repayment holiday is assessed by their lender. A rise in urgent or distressed listings would provide a further test for the resilience of housing values.”

Despite the positive signs, falling values in Melbourne and Sydney, which make up about 40 per cent of Australian’s housing stock by number and 55 per cent by value, pushed the national reading into a fifth straight month of decline.

“By far the weakest result across the capital cities, Melbourne housing values were down 0.9% in September. Since peaking in March, Melbourne values are down 5.5 per cent. With restrictions starting to lift and private home inspections once again permitted, we expect to see activity lift in October.”

He said the resilience in regional values was because they weren’t recording the same growth conditions pre-COVID, so home values in these markets were often more affordable.

“Anecdotally we are also observing a transition of demand away from the cities towards the major regional centres, particularly those that are adjacent to the larger capitals where residents can commute back to the cities if required.

“Remote working arrangements are no doubt a factor in supporting demand in these markets, but lifestyle opportunities and a desire for lower-density housing options are also playing a part.

“The housing market outlook is subject to headwinds as fiscal support is reduced, labour markets remain weak and mortgage payment deferrals become less common.

“However, there are a number of factors that are supporting improved housing market conditions.

“The aggregate effect of low mortgage rates, and the prospect that rates could fall further, low inventory levels, government incentives and improving consumer sentiment seems to be outweighing the negative economic shock brought about by the pandemic, “ Lawless said.