According to the April 2016 Housing Market and Economic Update
from CoreLogic RP Data
, combined capital city home values have increased by 0.2% in March 2016, whilst values are 1.6% higher for the first quarter of 2016.
The capital cities which saw property values rise include Sydney, Adelaide, Perth and Darwin, whilst other cities saw a decline in their property values.
Looking back over the past 12 months, combined capital city home values have increased by 6.4%
, with Melbourne (9.8%) and Sydney (7.4%) recording the highest amounts of growth, whilst Brisbane (4.5%), Hobart (4.8%) and Canberra (1.7%) all saw moderate growth.
Today, residential real estate underpins Australia’s wealth which has reached $6.5 trillion and accounts for more than half of all household wealth.
Even though the combined capital cities have seen 6.4% growth, the annual rate of capital gain is at its lowest level since September 2013. In spite of this, it is still more than the annual gain over five years (4.3%) as well as the ten year annual gain of 5.4%.
So how is each capital city in Australia performing? We look at Sydney, Melbourne and Brisbane in more detail.
- Median House Price: $805,000 (7.5% capital gain over past 12 months)
- Median Unit Price: $645,000 (7.3% capital gain over past 12 months)
In Sydney, home values are now increasing at their slowest annual pace since July 2013. However, Sydney’s rents are still increasing, 0.8% for houses and 3.4% for units. However as property prices are starting to ease in Sydney, and falling in some locations, there are still plenty of good reasons to buy property in Sydney.
Jobs are continually being created here and the population is growing strong which creates a demand for housing. Both home buyers and investors are looking for property and there is a shortage of decent properties within the Inner West and Eastern Suburbs regions.
The number of new property listings in Sydney stood at 6,256 which is a decrease of 2.7% in 12 months and shows that there is still high demand for Sydney properties.
As well as strong population growth and job creation, the state economy also remains strong, helped by major infrastructure spending, especially with the development at Barangaroo, upgrade of the Light Rail network, Parramatta revitalisation and the new airport at Badgery’s Creek. Sydney is also seeing low vacancy rates at the moment and it is suggested that some parts of Sydney’s property market might start to see a lift come quarter three of this year.
- Median House Price: $610,000 (10.7% capital gain over past 12 months)
- Median Unit Price: $645,000 (2.5% capital gain over past 12 months)
The annual home value growth in Melbourne is now significantly higher than in Sydney and the property market continues to perform strongly. Home values over the last 12 months have risen at the fastest pace compared to all of the capital cities.
However, Melbourne still has a large oversupply of apartments, particularly within the CBD and inner suburbs, with more new apartments expected to come to the market. This will slow down capital gains and rental growth here, but it is still important to think long term.
Melbourne’s population is still growing strong and the capital city is expected to overtake Sydney’s population come 2056. According to the Australian Bureau of Statistics, Melbourne’s population is set to almost double to 8.2 million people by 2056 from the current 4.4 million. This will be helped by interstate and overseas migration, as well as the natural birth/death rate. This will mean that the demand for new property is high so investors and home buyers both need to think of the long term gains and not worry too much about the short term.
Buyers should concentrate on other areas of Melbourne which still have a shortage of homes and apartments such as the middle ring suburbs, or southern and eastern suburbs.
In spite of this, Melbourne remains attractive to many due to the more affordable property prices compared to Sydney and similar incomes of the two cities. Plus it has also been ranked by the Economist Intelligence Unit’s Survey as the most liveable city in the world five years in a row, which is an attractive prospect for many.
- Median House Price: $495,200 (4.9% capital gain over past 12 months)
- Median Unit Price: $398,000 (0.5% capital gain over past 12 months)
In Brisbane, annual capital gains have been moderate, but there are signs that this will start to pick up. There are many major developments and infrastructure planned and underway in Brisbane to help both the state’s economy and fuel tourism. Key major developments include Queen’s Wharf Brisbane which will redevelop the waterside precinct area with a brand new casino, five star hotels, retail, restaurants and entertainment zones and plenty of new open public spaces.
Transport and roads are also being looked at, especially as the population of Brisbane is to increase to more than 3 million people in 2031 from the current 2 million. This population increase will fuel demand for property and new infrastructure needs to be provided to meet this demand.
Tourism improved over the last year helped by the lower Aussie dollar which has also helped to create more jobs within the tourism and hospitality sector.
With property prices much more affordable here compared to Melbourne and Sydney, and higher rental yields, investors in particular as well as home buyers are focusing their efforts on the inner and middle ring suburbs of Brisbane and we have seen this ourselves at iBuyNew over the last year and a half.
With property prices performing slowly over the last few years, it is thought that Brisbane is where the next price growth will be. However, it is thought that by the end of 2016, Melbourne will become the property market leader with the strongest performing property market, followed by Brisbane then Sydney.
Even though each property market is at different stages of the property cycle, there are still opportunities within each city to be had, if you know where you should be buying. Whether you are a home buyer or an investor you should try to look at the long term approach and try to buy a property in the right location that will benefit from capital gains and is a solid investment opportunity both now and in the future.
Brisbane is a great market to buy a property in right now with affordable prices, which are almost half the cost of a Sydney property. If you are interested in buying a property this year, then you need to do your due diligence to ensure you buy the right property.
To help you find the right property for you and your budget, make sure you speak to a Property Consultant at iBuyNew. Our friendly Property Consultants at iBuyNew are here to guide you through the whole property buying process and can pinpoint exactly which properties you should be buying. Call us today on 1300 123 463
Published on 18th of April 2016 by Marty Stanowich