Australia’s property market might be back on track now that home values have increased for two straight months, according to a CoreLogic report released Monday.

CoreLogic’s national Home Value Index rose by 0.5% in April, following a 0.6% increase in March, a sign the market is recovering from what the report described as a “relatively short but sharp downturn.”

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“Not only are we seeing housing values stabilizing or rising across most areas of the country, a number of other indicators are confirming the positive shift,” CoreLogic’s research director Tim Lawless said in the report. 

Home values had been in negative territory for more than a year, falling 9.1% between May 2022 and February 2023, the report said. Sydney ranked No. 1 for April in the report, released Monday, with a 1.3% increase month on month, and a 3% rise over the previous quarter. Still, Sydney’s median home price of A$1.03 million (US$680,000) was down 10.7% annually.

Two factors in particular are reviving prices in the overall market: the return of overseas buyers and lack of supply, particularly of rentals. 

“The key drivers of this positive inflection seem to be the larger than expected rise in net overseas migration, which has created additional housing demand at a time of extremely tight rental conditions and well-below-average levels of advertised supply,” Mr. Lawless said.

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Stabilizing interest rates have factored into the market’s recovery. According to Reuters, the Bank of Australia is expected to maintain the current interest rate of 3.6% for May in a decision to come this week. In April, the bank didn’t hike rates for the first time in a year

Meet me in St. Louis? 

Maybe, if buyers are looking for an easygoing lifestyle where they can afford a mansion for less than they’d pay for a two-bedroom apartment in some other major U.S. cities, according to Janet Horlacher, a St. Louis native and owner and principal broker of Janet McAfee Real Estate/Luxury Portfolio International in the city.

“Affordability is not the sexiest thing to talk about, but you know, the average sale price of a home in St. Louis is about 30% lower than the national average,” she said. “Our luxury buyers can have so much more buying power and the quality that they can afford is just so enticing.”

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That’s a major reason why St. Louis is the No. 1 metro area on The Wall Street Journal/Realtor.com Emerging Housing Markets Index first quarter of 2023, released Wednesday, shooting up from 16th place the previous quarter.

Then there’s sports and entertainment—including the St. Louis Cardinals baseball team and the Missouri Botanical Garden—and the accessibility of the city, which is located near the confluence of the Missouri and Mississippi rivers.

“Our cultural institutions in St. Louis are world class and they’re free,” Ms. Horlacher said. “Another thing people here get hooked on is accessibility. You can get just about anywhere in St. Louis in 20 to 30 minutes. We wig out if we’re going like five or 10 miles under the speed limit on the highway; we are so spoiled.”

And the regional stereotype is as true in St. Louis as anywhere in the Midwest: People are friendlier. 

“When I moved back home from the East Coast, I had to relearn how to walk slower and look people in the eye,” she said.

Although cities in the Sun Belt—which includes the southern swath of the U.S. from Florida to California—have been dominating the Emerging Housing Index for the last several quarters, it’s not a surprise that a Midwest locale topped the ranking this quarter, according to Danielle Hale, Realtor.com’s chief economist. 

“The Midwest has been a standout region lately when it comes to job growth, unemployment and all those factors that underlie a solid economy,” she said. “What is interesting is that the luxury market in St. Louis is very different than other markets in the sense that the luxury entry price is much, much lower than it is in any other market. This could reflect the fact that affordability is important across the board, even in the luxury sector.”

St. Louis’s relatively small size could also be attracting buyers, Ms. Hale noted. 

“We’re seeing buyers move from bigger cities to smaller cities in search of affordability, and so that could also be a factor at play here,” she said. 

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Other metro areas that ranked in the top 10 of the Index include Hilton Head Island, South Carolina; Boulder, Colorado; San Jose, California; Dallas; Nashville; Salt Lake City; Tampa, Florida; Asheville, North Carolina; and Portland, Maine.