Sydney and Melbourne continue to see strong home price growth at start of year

Taylor Scott International News

The Australian housing market has started the year on a strong footing with strong gains recorded across Sydney and Melbourne, pushing capital city dwelling values 1.3% higher. But the latest home value index from Core Logic RP Data shows that a two tier housing market persisted over the first month of 2015 as performance varied substantially between capital cities. The largest cities, which have more influence over the combined capital city index due to the high number of dwellings, continued to push the aggregate index higher. Melbourne values were up 2.7% compared with December and Sydney values increased by 1.4%. Hobart also recorded a strong monthly result with values up 1.6%. Three capital cities recorded a decline in values over the month, with Darwin down 1.3%, Adelaide down 1.2% and Perth values down 0.6%. The quarterly data shows a clearer picture for housing market conditions, with the combined capitals index recording a 1.9% over the three months ending January 2015. While Sydney continued to be the standout for capital gains, the most significant increase in values over the past three months was recorded in Hobart with a rise of 4.4%, eclipsing the 2.4% capital gain in Sydney, which was the second highest quarterly reading across the capitals. According to the firm’s head of research, Tim Lawless, having Hobart produce the strongest results over the past quarter is certainly a unique occurrence. ‘Generally, Hobart has recorded the lowest rate of capital gain since the onset of the global financial crisis, however housing market conditions have been improving,’ he said. ‘Local economic conditions have been improving and Hobart homes are the most affordable of any capital city. Additionally the market is benefitting from the return of lifestyle buyers. After Darwin, the southernmost capital is also showing the second highest gross rental yields of any other capital city,’ he added. Despite Hobart’s strong quarterly capital gain, Sydney still holds as the city with the highest rate of capital gain over the past 12 months where property values are currently 13% higher. The annual gain in property prices across the combined capitals index was 8% at the end of January, ranging from a 13% gain in Sydney to a 0.3% reduction in Canberra. Sydney has also shown the highest aggregated capital growth of any capital city in the years since the global downturn. Lawless pointed out that since the beginning of 2009, Sydney has been a stand out housing market. From January 2009 through to January 2015 Sydney home values have increased by 57%. The second highest rate of growth over the same period has been in Melbourne where values are 50% higher. There is a significant gap between the next best performers over the same six year period. Darwin has seen less than half the level of growth at 24%, followed by Canberra at 18% and Perth at 17%. At the other end of the spectrum is Hobart where homes values are unmoved over the… Continue reading →

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