Capital growth in Sydney and Melbourne continues
If you thought that Sydney and Melbourne’s property markets might be slowing down then think again. There is no sign for a slow down anytime soon.
According to the CoreLogic RP Data Home Value Index, during the 2014-15 financial year, the combined capital city home values actually increased by 9.8%.
The rate of capital growth for homes in both Sydney and Melbourne has also been much greater than the change in values across the remaining capital cities across Australia and this trend is expected to continue throughout this 2015-16 financial year.
This is helped by the low mortgage rates and interest rates currently at an all-time low, but as these rates are the same throughout Australia this alone does not explain the much stronger demand in Australia’s two largest cities.
One of the main drivers of high capital growth in Sydney and Melbourne is population growth and migration, alongside more diversified economies, stronger job creation and an increasing demand for property from overseas investors.
Melbourne especially is experiencing a flock of new migrants coming to live, perhaps helped by the fact that the city has been ranked as the most liveable city in the world for the fourth year running by the Economist Intelligence Unit’s liveability survey.
In spite of this, affordability is becoming a major concern especially in Sydney where the median price for a house now sits at $900,000, whilst for a unit this is $650,000. In comparison, the next most expensive city to live in is Melbourne where the median price for a house is $615,000 and a unit is $480,000.
In the last 12 months alone houses have made a capital gain of 17.8% and units have made a gain of 9.5%. Interestingly, the combined capital city home values have increased by 43.1% between December 2008 and June 2015, of which Sydney grew by a whopping 68.8% followed by Melbourne with 54.1%. In comparison, Brisbane experienced a moderate growth of 8.9% during this same time period.
With prices continuing to increase, the housing affordability issue in Sydney is expected to slow down capital growth during this 2015-16 financial year, but for the moment both Sydney and Melbourne continue to show strong signs of capital growth with plenty of new developments and off the plan units being built around the city.
Published on 29th of July 2015 by Marty Stanowich