Sydney dwelling values surge 3.1 per cent in May
According to the latest CoreLogic Home Value Index report for May, the combined capital cities of Australia rose in value by 1.6 per cent in May. House values drove most of this growth, up 1.8 per cent, whilst unit values grew by 0.1 per cent.
Out of all the capital cities, Sydney’s dwelling values surged in value and were up 3.1 per cent over May, 6.6 per cent over the quarter and 13.1 per cent year on year.
Three other capital cities also saw a rise of more than 1 per cent and include Canberra (2.5 per cent), Hobart (2.2 per cent) and Melbourne (1.6 per cent). Brisbane and Adelaide only grew by 0.1 per cent, whilst Perth was the only city to see a fall in prices (-2.7 per cent).
Since the start of January, the combined capitals index has recorded a 5 per cent increase, contributing to the annual trend in capital gains to rebound after conditions started to slow down since July 2015. Year on Year the combined capitals have seen growth of 10 per cent, although it did fall in December to 7.4 per cent.
In the past four years, Sydney dwelling values increased 57.5 per cent, while Melbourne dwelling values are up 39.4 per cent and Brisbane increased 18.5 per cent.
Currently, year on year, Melbourne is the strongest performing capital city with a 13.9 per cent capital gain. However, Sydney is still the most expensive city to buy in with the median dwelling prices sitting at $782,000, followed by Melbourne with median dwelling prices at $590,000. For many, Brisbane is still an affordable option with the median dwelling price here at $475,000.
For units, Hobart saw the highest amount of growth for May with a rise of 8.4 per cent. This was followed by Brisbane – Gold Coast at 1.5 per cent, then Brisbane at 1.3 per cent. Next was Sydney at 0.7 per cent, then Melbourne at 0.5 per cent.
For the quarter, Sydney’s units recorded the highest amount of growth of 5.3 per cent and year on year 15.5 per cent. In terms of pricing for units, Sydney’s median unit price is $680,000, followed by $492,000 in Melbourne. Units in Brisbane remain very appealing for home buyers and investors at $385,000.
As well as capital gains rebounding, auction clearance rates across the combined capital cities are stable, hovering around the high 60 per cent to low 70 per cent range since February 2016.
According to CoreLogic head of research Tim Lawless, more than 95 per cent of all bank valuation instructions are up 6.7 per cent over the past 28 days, which signals a rise in mortgage related activity.
“The extent to which investors are fuelling the latest surge in Sydney home values is difficult to quantify, however housing finance data to March shows investors, as a proportion of all new mortgage commitments, have been trending higher since reaching a recent trough in November last year at 42.9 per cent. The March data shows investors now comprise of 47.6 per cent of all new mortgage commitments which is the highest proportional reading since August last year.”
As well as this, there is also some evidence that some lenders are reversing the tighter lending requirements that were previously in place for investment purposes, and anecdotal evidence suggests the number of investors have grown further which is great news for any property investor looking at getting into the housing market.
During late May, Westpac changed its lending requirements from 20 per cent deposit required from investors to 10 per cent deposit. Other lenders have also started to offer more attractive interest rates for investors.
With the historically low interest rates, mortgage rates are now even lower which is having a positive effect on consumer confidence and housing market conditions.
Published on 6th of June 2016 by Marty Stanowich