Home values across Australia continue to rise in 2016
According to the latest CoreLogic RP Data Hedonic Home Value Index for April 2016, home values in Australia are on the rise, despite rental records falling to new record lows.
April saw the pace of capital gains rebound from the flat numbers experienced in March, whilst dwelling values also increased by an average of 1.7 per cent across the CoreLogic combined capitals’ index. The combined capital city dwelling values are now 3.3 per cent higher over the first four months of 2016.
The capital city which saw the greatest change in dwelling values for April was Sydney with 2.4 per cent increase, followed by Brisbane with 2.2 per cent and then Adelaide at 2 per cent. Melbourne on the other hand only saw 1.1 per cent growth this month, but YoY Melbourne remains top dog with 10.1 per cent increase on dwelling values with a total gross return of 13.6 per cent. However, the annual growth rate has fallen from its recent peak of 14.2 per cent to 10.1 per cent, but it is the only capital city in Australia to experience double digit growth over the past year.
Sydney on the other hand had a slightly lower change in dwelling values sitting at 8.9 per cent for YoY with a 12.7 per cent total gross return.
In spite of this, Sydney still is the most expensive city to buy a property, with the median dwelling value sitting at $780,000, compared to Melbourne which is more affordable at $585,000. However, properties in Sydney are much more affordable than what they were at the end of 2015, with units now sitting at $680,000, which is 11.5 per cent up YoY. Melbourne’s units currently sit around $489,000, which makes Melbourne a good option for both home buyers and investors alike looking for a strong capital city, but more affordable than Sydney.
For something even more affordable, then Brisbane has a median dwelling value of $465,000 ($382,500 for units) and has seen 6.2 per cent change in dwelling values over the past 12 months.
According to Tim Lawless, CoreLogic RP Data research director, “The results show value growth moved at a faster pace compared with the final three months of 2015 when capital city dwelling values slid 1.4 per cent lower off the back of weaker market conditions in Sydney and Melbourne.”
“While we’ve seen capital gains moderate substantially after peaking last year in Sydney and Melbourne, dwelling values continue to trend higher, just not as fast. The annual rate of growth in Sydney peaked at 18.4 per cent in July last year and has since moderated back to slightly less than half the peak rate of growth, at 8.9 per cent over the most recent twelve month period,” Mr Lawless said.
Looking at the change in dwelling values over growth cycles from June 2012 to present day, overall capital city dwelling values have increased by 34.4 per cent, with Sydney taking the lead with an astounding 52.7 per cent rise, followed by a rise of 37.1 per cent in Melbourne. Brisbane also experienced a rise of 18.4 per cent in its dwelling values. It is important to remember that even though Sydney and Melbourne are not seeing as high a growth level as they had been experiencing, their level of growth is still trending well, just at a more reasonable level.
At the other end of the scale is Perth and Darwin, which are the only two capital cities to have experienced a fall in home values over the past 12 months. Perth dwelling values are down 2.1 per cent, whilst Darwin has seen values fall by 3.7 per cent. However, Mr Lawless commented, “With recent month-on-month increases in home values in these two cities, the declining trend rate is now levelling. This may be an early sign that these markets are beginning to find their cyclical trough after more than a year of annual declines.”
In terms of rental yields, the gross rental yield for capital city dwellings dropped to a new record low of 3.4 per cent this month, whilst for Melbourne, the gross yield profile is much lower at approximately 3.0 per cent.
Published on 2nd of May 2016 by Marty Stanowich