Debbie Shankar - 31 Aug, 2016

Property Market Update August 2016

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The Australian real estate market continues to stabilise after a period of high growth. The combined value of homes in Australian capital cities has marginally increased over the month in four capitals, elsewhere declines occurred. Homes sales are lower, as are rents, and selling times have increased slightly. Economists state that the market is on trend and reflects current economic conditions.

Home Values in Australia

The combined capital city values of homes have increased during the month by 0.8%. Home values in Adelaide, Hobart, Melbourne, and Sydney have risen, but elsewhere these values have fallen.

Over the last three months to June 2016, home values have increased by 2.9% in all capitals except Brisbane, Darwin and Perth. Annually speaking, the rate of growth for all capitals is 6.1%. This figure is the lowest recorded since September 2013.

Capital City Home Values July 2016
  Change in Property Values  
City Over the Last Month Over the Last 3-Months Over the Last 12-Months Total Gross Returns Median Property Prices
Sydney +1.3% +5.6% +9.1% +12.7% $775,000
Melbourne +1.1% +3.5% +7.5% +10.8% $585,500
Brisbane -0.8% -0.9% +3.9% +8.6% $477,500
Adelaide 1.4% +0.2% +4.8% +9.2% $417,500
Perth -0.9% -4.3% -5.6% -1.9% $490,000
Hobart +1.1% +5.2% +6.2% +11.9% $327,800
Darwin -6.2% -7.0% -7.6% -2.9% $497,500
Canberra -0.7% +0.7% +2.9% 7.2% $561,000
All of Australia +0.8% +2.9% +6.1% 9.9% $570,000

Source: CoreLogic RPData

Property Sales Across Australia

Over the last 12-months, the number of dwelling sales in capital cities has fallen nationwide. According to CoreLogic data, approximately 199,735 homes sold, and 91,553 units across the combined capitals over this time. Also, home sales have declined by 10.9% and unit sales by 17.5%.

Nationally, home sales have also dropped. Over the last 12-months to July 2016 329,444 homes were sold and 126,840 units. The sales of homes declined by 7.9%, and units by 14.8% over the year.

While sales are falling, economists say that the market is on trend after record rates of increase. It is also important to note that off-the-plan sales, which are at record levels, will have an impact on future unit sales volumes.

New Listings on the Market

The total number of homes listed for sale in Australia over the last month totalled 230,310. Of this number, 100,696 listings were in capital cities. According to CoreLogic data, listings have fallen by 1.2% nationally when compared to figures this time last year.

It is also important to note that there were 37,111 new homes listed for sale with almost 23,000 of these being in capital cities. The number of new listings nationwide is 10.9% lower than this time last year, and 13.9% lower across all Australian capital cities.

Rental Market Positioning

Rents are continuing to fall across Australia. Combined capital city rents for houses are averaging $485 a week and units $467 a week. Gross rental yields nationally for houses are at 3.2%, whereas unit yields are at 4.1%. These rates are at record lows when compared to data from July 2015, as 12-months ago homes were recording a rental yield of 3.5% and units 4.4%.

Rental rates have declined in Adelaide, Brisbane, Darwin and Perth for both homes and units. Hobart rental rates have increased by 3.6% for the year, but elsewhere rental yields have not risen above 2.0%.

Economic Data

There is mixed sentiment in the market at present, with new lending to both owner occupiers and investors decreasing over the month. Investment credit is now at half of the Australian Prudential Regulation Authority’s proposed annual rate of 10%. However, the value of housing credit is rising, which is due to increasing home prices.

Consumer sentiment is said to have eased and is now in a neutral state despite the Reserve Bank of Australia dropping the official cash rate to 1.5%. Many market analysts are suggesting that the inability of major banks to pass on the full rate cut has stifled any positive growth in this sector.

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