Two tier house prices growth continues in Australia led by Sydney and Melbourne

Taylor Scott International News

The two tiered growth evident across Australia’s housing markets continued in July with Sydney and Melbourne driving home values higher, the latest monthly index shows. The CoreLogic RP Data Home Value Index increased by 2.8% month on month and 11.1% year on year and the total aggregated value of Australian housing increased by just over half a trillion dollars over the past 12 months to $6 trillion. Melbourne has traded places with Sydney to record the highest rate of capital gain, with values in the city up 6.1% over the three months ending in July, the highest rolling quarterly rate of growth since the three months ending August last year when values grew 6.4%. Growth in Sydney wasn’t quite as strong over the rolling quarter, up 5.4% but still the highest rate of growth since the March quarter this year when it was 5.8%. ‘To date, the capital cities have seen remarkable differences over the growth cycle which broadly commenced at the end of May 2012 and since that time dwelling values across our combined capitals index have increased by 30.4%,’ said Tim Lawless, CoreLogic RP Data’s head of research. Sydney values are 47.9% higher over the current cycle and Melbourne values are 32.1% higher while every other capital city has seen growth of less than 13% over the same period. Lawless explained that this highlights the extent to which the Sydney and Melbourne markets have outperformed other markets over the past three years. He pointed out that over the last year several cities have seen price corrections. Darwin has seen values falling the most, down by 5.3% while in Perth values also drifted lower over the year, down 0.3%. At the same time, the annual rate of capital gain in Sydney reached a new cyclical high with home values moving 18.4% higher over the year to the highest annual rate of growth for Sydney since the 12 months ending in December 2002. The strongest growth conditions outside of Sydney and Melbourne have been in Brisbane where dwelling values were 3.9% higher over the year. Based on the median dwelling price, Sydney prices are now 72% higher than Brisbane’s and Melbourne’s are 24% higher. Detached housing continued to outperform the unit sector, with house values substantially outperforming unit values over the past year apart from Hobart and Darwin. Detached home values are up 11.6% compared with a 7.2% increase in unit values over the past year. The differential is most pronounced in Melbourne where house values have surged 12.3% higher over the year compared with a 4.8% rise in unit values. ‘The higher growth rates for houses compared with units is likely to be supply related, with the underlying land component driving detached housing values higher at a time when new apartment supply has seen a substantial boost from new construction,’ Lawless said. While dwelling values continue to rise across most cities, the pace of rental growth has slipped to a new record low, which has… Continue reading →

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