Dwelling values fall in May for combined capital cities
According to the latest CoreLogic RP Data Hedonic Home Value Index, dwelling values for May have fallen 0.9% over the month for the combined capitals stalling home value growth.
The first four months of 2015 had seen an increase in dwelling values of 3.8 per cent, but the results for May show a fall of 0.9 per cent for the combined capitals index and is the first time there has been a drop since November 2014. However, the combined capitals remain 9 per cent up year on year.
Although Sydney saw a drop in dwelling values of -0.7 per cent for the month, the capital city is still up by 3.3 per cent for the quarter and 15 per cent year on year. Melbourne and Brisbane also saw falls in May with a drop of -1.7 per cent and -0.8 per cent respectively. Melbourne still remains 9 per cent ahead year on year, whilst Brisbane is 3.1 per cent ahead.
According to Tim Lawless, CoreLogic RP Data head of research, "The weaker reading across the May results is likely to be short-lived, with the Index expected to show value better growth next month."
He also suggests that, “the negative monthly growth figure comes at a time when dwelling values have been trending higher, driven by exceptionally strong housing market conditions in Sydney, and to a lesser extent in Melbourne.”
Both Melbourne and Sydney are enjoying strong market and economic conditions at present which is helped by record high auction clearance rates as well as there being a shortage of stock, especially in Sydney. However, the new apartment sector is strengthening with higher levels of supply which could be the reason why unit values are increasing at a slower rate compared to houses.
The low interest rate environment is also sure to fuel the property market, and this negative May result should be regarded as a one-off as property prices correct themselves after the previous stronger months.
The only capital cities that saw a growth in monthly dwelling values for May were Darwin with 0.6 per cent growth and Canberra which had a 1.4 per cent growth.
Since May 2012, dwelling values for the combined capital cities has increased by 24.2 per cent, with Sydney leading the way with a whopping increase of 39.3 per cent. This is followed by Melbourne who saw an increase of 22.4 per cent and Darwin takes third place with values 18.3 per cent higher. Brisbane saw a 10.6 per cent increase.
Published on 2nd of June 2015 by Marty Stanowich