This represents a 1.1% increase on the month, and a 6.1% increase on the year.
Sydney and Melbourne propped up the overall housing market growth, with those cities up 1.7% and 1.2% in February respectively.
Australia's two largest cities are now up to double digit growth for the year - Sydney 10.9%, and Melbourne 10.7%.
That's despite tough climate conditions affecting home prices in regional Australia - Western/outback Queensland is down 20.9% on the year.
WA's wheat belt also saw a 15.3% downturn on the year, followed by southern outback WA at 11%, and far western NSW at 6.7%.
Despite the regional slump, CoreLogic's head of research Tim Lawless attributed the overall monthly growth of 1.1% to cheap credit, and an easing in lending criteria since July 2019.
“At the current run rate of growth, the national index is likely to reach a new nominal high over the next two months," Mr Lawless said.
“Structural factors may also be at play, including a rise in borrowing capacity following changes to serviceability assessment from APRA [Australian Prudential Regulation Authority] in July 2019, and the dominance of owner occupier buyers (rather than investors) through the recovery phase to date.
“With lenders favouring ‘high quality’ borrowers, buyers with a large deposit and low level of debt relative to their incomes, are likely to be those who receive the lowest mortgage rates - another factor that could be supporting demand at the more expensive end of the market.”
However, this bounce back is still 2.3% below 2017 peaks, according to Westpac senior economist Matthew Hassan.
"At the current pace they will regain that level by mid 2020, although prices may show a more volatile path as bushfire and coronavirus shocks impact the economy," he said.
CoreLogic's report found every capital city is showing an 'upward trajectory', except for Darwin, which is down 1.8% in February.
Outside of Sydney and Melbourne, however, February's home price growth has been relatively modest, with Hobart and Canberra the next-best performing capitals at 0.8% growth apiece.
Brisbane was next at 0.6%, while Perth and Adelaide saw 0.3% and 0.1% monthly growth respectively.
Perth, in particular, has a long road to recovery, after experiencing a 4% slump on the year, according to Lawless.
“Although Perth values are now trending higher, the recovery period is likely to be a long one, with Perth housing values remaining 21.0% below their peak," he said.
The news of a modest rebound in Perth and Adelaide comes after those cities' slumps were attributed to jobs downturn, and buyer confidence.
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Surge in home prices led to poorer rental yields
Nationally, rents were up 0.4% in February, which represents a real-term deficit of 0.7%, when looking at home price growth of 1.1%.
The main driver of rental price increases is due to tightening supply, with investor participation in the housing market at near-record lows, according to CoreLogic's Tim Lawless.
“The primary factors driving this rebound remain in place and include an extremely low cost of debt and improved borrowing capacity," he said.
"However, considering the sluggish pace of household income growth, housing affordability is eroding rapidly which is likely to see some parts of the market become less active.”
Nationally, rental yield was at 3.8% - the top performing capital was Darwin at 5.9%, directly at odds with its home price slump and its rent price decline of 1.6% on the year.
Hobart's rental yield is 5.0%, with rents up 5.5% over the last 12 months.
Sydney's rent hike remains subdued at 0.3%, and was the weakest-yielding capital at 3.0%.
Last week, CoreLogic's head of residential research Eliza Owen said Brisbane unit construction is slowing down, and unit prices are slowly experiencing a turnaround.
"Since bottoming out in June 2019, CoreLogic indices show the Brisbane unit market has recovered 2.2%," Ms Owen said.
"With approvals data suggesting a decline in construction, and steady estimates of population growth, Queensland dwellings may fall into under-supply in the year ahead."
CoreLogic's February home prices report said investors may look outside Sydney and Melbourne for cash flow-positive properties.
"Although gross rental yields are trending lower, so too are mortgage rates," the report said.
"At the end of January, the average three-year fixed rate for an investor mortgage was 3.48%.
"This is only marginally lower than capital city gross rental yields, implying investors will be finding it hard to locate a cash flow positive investment property in low yielding markets like Sydney and Melbourne."
There's been a convergence in the number of dwellings required and supplied in QLD since the start of 2018.
— Eliza Owen (@eliza_owen) February 20, 2020
This week's #corelogicresearch pulse is investigating where we're at with unit over-supply in Brisbane!https://t.co/WwnQUOIGsh pic.twitter.com/VOMa0tRwZ2
Effect of coronavirus on home prices
The effect of coronavirus, or COVID-19, on home prices is yet to be realised, according to CoreLogic's Tim Lawless.
“A more significant downturn in consumer sentiment related to the coronavirus outbreak could become a determining factor that impacts the market over coming months," he said.
“While housing demand is now relatively insulated from a downturn in foreign buyers, the economic impact on key export sectors such as education, tourism and commodities is likely to result in weaker economic conditions and lower consumer sentiment.
"Consumer sentiment readings are already low, and a further deterioration could see housing market activity start to slow.”
Despite strong February results, coronavirus could still impact the housing market, according to Westpac's Matthew Hassan.
"While summer hiatus means the Feb[ruary] price update is coming off low volumes, recent weekly auction results, which reflect more normal flows, confirm the relatively strong start," he said.
"Markets will likely be buffeted by coronavirus developments in coming months.
"However, prices are clearly carrying strong momentum as at Feb[ruary]."
Coronavirus' effect on trade and sharemarkets, along with unemployment data and poor wage growth, is also reportedly bringing forward the Reserve Bank's plan to cut its cash rate from April to March, according to some experts.
This, theoretically, would further flood the market with home buyers and increase housing demand.
The RBA cut rates three times in the second half of 2019.
The market is now expecting the #RBA to use the remainder of its conventional policy immediately - it may well do so, in particular if nothing is forthcoming from other policy makers in a timely manner... #ausbiz pic.twitter.com/M0zhJlbxXa
— Alex Joiner (@IFM_Economist) March 1, 2020
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