Dwelling values surge in July for Sydney and Melbourne
There’s more good news for home owners in Sydney and Melbourne as both capital cities have pushed home values higher for July. The CoreLogic RP Data Home Value Index now sits 2.8% higher for July, whilst it is now 11.1% higher over the past 12 months.
With this capital growth and the introduction of new stock, the aggregated national value of all dwellings is now beyond the $6 trillion mark.
Interestingly, Melbourne had the greatest change in dwelling values for the month with an increase of 4.9% and 6.1% for the quarter, whilst for year on year; Melbourne took second place for growth with 11.5%. Sydney remains in first place for year on year with a massive growth of 18.4%. The last time that Melbourne saw a high growth for the quarter was the three months ending August 2014 which saw capital values grow by 6.4%.
However, Sydney is second for the month with a growth of 3.3% and 5.4% for the quarter and has a total gross return of a whopping 22.8%.
The median dwelling price for Sydney is now $790,000, whilst Melbourne is still affordable in comparison with a median dwelling price of $568,200. If buying a house in Sydney, then the median price is close to $1 million (now $921,500) compared to Melbourne with a median house value of $630,000 and $490,000 for Brisbane.
For units, then Sydney’s median unit price is $660,000, compared to Melbourne’s $483,500 and Brisbane’s median unit value of $380,000.
Even though Brisbane is much more affordable for both houses and units, Brisbane is still somewhat behind Melbourne and Sydney and experienced a 0.5% growth for the month, 1.3% for the quarter and 3.9% YoY. Brisbane is still the most affordable priced capital city out of the three capital cities with a median dwelling price of $458,200. Many property investors are flocking to Brisbane to purchase an investment property here before prices start to rise, which they are expected to do once Sydney and Melbourne’s property markets start to slow down.
Over the past twelve months, the total aggregated value of housing in Australia has actually grown by just over half a trillion dollars.
According to Tim Lawless, head of research at CoreLogic RP Data, the next capital city (not counting Sydney or Melbourne) that had strong growth conditions was Brisbane. Dwelling values were 3.9% higher over the year.
"While Sydney and Melbourne values continue to boom, the next best performing city, Brisbane, has seen dwelling values rise by just 3.9 per cent over the past twelve months. Based on the median dwelling price, Sydney prices are now 72 per cent higher than Brisbane’s and Melbourne’s are 24 per cent higher," he said.
Even though dwelling values have been growing in value across most of Australia’s major cities, rental growth has fallen to a new record low. Over the past twelve months, rents across capital cities only increased by 0.9%, which is the slowest on record.
Due to this, gross rental yields sit at record lows across the combined capital city measure. Hobart is the only capital city where rental yields have not plummeted over the year and has kept pace with value growth.
Even though both Sydney and Melbourne and experiencing low rental yields at present; investors do not seem to be put off by this as there is still plenty of investor activity in both cities. They seem to be more interested in the capital growth compared to the lower rental yields.
Rents in Sydney over the last twelve months have only grown by 2.5%, despite values having climbed by 18.4%.
Unsurprisingly, the detached housing sector is also currently outperforming the unit sector, due to there being an increased supply in units.
But it’s not all good news for Australia’s capital cities. Both Darwin and Perth saw dwelling values fall YoY. Darwin saw the greatest fall in dwelling values, with a fall of 5.3%, followed by Perth, which was down by 0.3%,
Published on 10th of August 2015 by Marty Stanowich