Dwelling values up in June says CoreLogic Report
June’s CoreLogic Home Value Index results are in and this month has recorded a 0.5% rise in the combined capital city dwelling values. However, five capitals over the month of June saw a fall in dwelling values.
Sydney, Melbourne and Hobart were the only capital cities to see a rise in dwelling values in June, with Hobart leading the way with a 1.8% increase, followed by Sydney (1.2%) and then Melbourne (0.8%). In fact, YoY, dwelling values have increased by 8.3% across the combined capital cities, particularly helped by Sydney and Melbourne who continue to push the CoreLogic Hedonic Home Value Index to new record highs.
Although CoreLogic reported weaker results in the final quarter of 2015 when the combined capitals’ index was down by 1.4%, the June results are showing a rebound in housing market conditions.
According to CoreLogic Asia Pacific research director Tim Lawless, “Importantly, the pace of capital gains in June was substantially lower than the April and May results when CoreLogic reported a 1.7% and 1.6% month-on-month lift in capital city dwelling values.”
“The monthly growth rate reduction is likely to be very much welcomed by state and federal government policy makers and regulators who may be concerned about a sustained rebound in capital gains.”
“As an example, home values in Sydney have been rising for four years, and have increased by a cumulative 59% over this time frame. Melbourne dwelling values have been rising for the same length of time and have moved 41% higher over the growth cycle to date.”
Although, Hobart saw the greatest increase in dwelling values over the month, for the quarter, Sydney still holds on to the lead with a 6.8% increase in dwelling values compared to Hobart’s 1.9% and Melbourne’s 3.5% increase. However, for the past 12 months, Melbourne has the greatest increase in dwelling values of 11.5%, closely followed by Sydney at 11.3% then Hobart (6.2%) and Brisbane (5.3%).
At the other end of the table, five of Australia’s capital cities recoded a decline in dwelling values. These included Darwin (-1.6%), Adelaide (-1.3%) and Canberra (-1.1%) which all saw declines of more than 1%. Perth recorded a decline of -0.8% and Brisbane experienced a slight fall of -0.1% for June.
Both Perth and Darwin have been suffering from a reduced housing demand due to weaker employment opportunities and a sharp downturn in migration which has helped home values drift ever lower since 2014.
Even though Brisbane experienced a slight fall in dwelling values for June, the city is still up YoY by 5.3% and 2.2% for the quarter. Compared to Sydney and Melbourne, Brisbane still remains an attractive investment option for property investors and owner occupiers alike with the average price for a house now sitting at $505,000 and a unit is priced at $389,000. In comparison, Sydney’s average house now costs $881,800 and units come in at $680,000, whilst Melbourne is slightly more affordable at $640,000 for houses and $495,000 for units.
One of the main reasons for the higher rates of capital gains found in Sydney and Melbourne is that both capital cities have strong economic conditions and a higher population growth rate. The increase in dwelling values for Hobart however comes from a long period of underperformance where home values only increased by 1.4% per annum over the past ten years, whilst being fuelled by its affordability compared to Sydney and Melbourne markets. A house in Hobart on average will cost you approximately $360,500, whilst a unit sits at $283,000. Although the economy in Hobart is nowhere as strong as Sydney’s or Melbourne’s, it does allow buyers to make lifestyle housing purchases here.
Published on 4th of July 2016 by Marty Stanowich