- 5 Jul, 2017

Property Market Update: Capital Gains Easing with Slowest Growth Since 2015

Sydney and Melbourne, the nation’s two hottest capitals regarding property values, cooled over April. Capital city dwelling values rose by just 0.1% across the capitals over the month. This increase was the lowest since December 2015.

However, since the last Reserve Bank rate cut August 2016 capital city dwelling values rose by 10%. Both Sydney and Melbourne made gains of around 13% since this time. Property growth consistently grew, along with investment. So, the fact April shows signs of slowing may indicate the market is peaking.

Capital City Home Values at 30th April 2017

All Dwellings Houses Units
City % Change Mth-on-Mth % Change Year-on-Year % Change Mth-on-Mth % Change Year-on-Year % Change Mth-on-Mth % Change Year-on-Year
Sydney -0.04 16.04 0.19 17.40 -1.19 9.82
Melbourne 0.50 15.27 0.64 16.52 -0.91 4.12
Brisbane 0.62 2.06 0.99 2.59 -3.13 -3.14
Adelaide 0.78 2.15 0.87 2.35 -0.27 -0.19
Perth -0.96 -6.03 -0.90 -6.04 -1.75 -5.89
Darwin 0.50 -2.29 1.27 -2.78 -2.43 0.26
Canberra -2.76 8.39 -3.05 8.73 1.72 3.76
Hobart 0.95 13.59 0.43 13.26 6.25 17.23

Source: CoreLogic RP Data

Although, economists suggest the softer housing market comes after several rate hikes by lenders since September 2016. It’s also noted that this change is despite the official cash rate remaining stable. According to Reserve Bank data, the average discounted variable rate investor mortgage edged 25 basis points higher, since August 2016. Subsequently, this is equivalent to a Reserve rate hike.

Despite this, median dwelling values rose across all capitals. Since November 2016, Sydney home values rose by $60,000; Melbourne by $50,000; Brisbane by 11,000; Perth by $10,000; Darwin by $2,000; Canberra by $37,000; and Hobart by $19,700.

Capital City Home Values October 2016

All Dwellings
City % Change Year On Year % Change Month On Month % Change Qtr. Total Gross Returns Median Dwelling Values
Sydney 16 0.0 4.0 19.6 $860,000
Melbourne 15.3 0.5 3.9 18.6 $650,000
Brisbane 2.1 0.6 0.5 6.4 $481,000
Adelaide 2.2 0.8 1.8 6.3 $430,000
Perth -6.0 -1.0 -2.4 -2.5 $472,000
Darwin -2.3 0.5 -0.9 2.6 $467,000
Canberra 8.4 -2.8 1.8 12.9 $605,000
Hobart 13.6 1.0 5.1 19.6 $363,200
Combined Capitals 11.2 0.1 2.9 14.9 $625,800

Source: CoreLogic RP Data

Softer Results Analysis

Dramatic capital gains recorded across Australian markets, particularly in Sydney and Melbourne. Between July 2016 and March 2017, Sydney dwelling prices rose by 11.3% in value and Melbourne’s by 12.6%.

Hobart has been the strongest performer over the last quarter, based on quarterly change. As a result, this city’s dwelling values rose by 5.1% over 3-months.

Nevertheless, economists caution that softer results over a month don’t indicate the market has peaked. April has coincided with Easter, ANZAC day, and school holidays, which traditionally denote a weaker period. Plus, auction rates are still strong.

Auction Rates

The combined capital city clearance rate rose to 76.9% in the closing week of April. Prior weekly clearance rates were at 69.8%, after a 10-week run at above 70%. Both Sydney and Melbourne have strong auction markets.

In the closing week of April, 804 properties auctioned in Sydney, with a clearance rate of 78.4%. Nonetheless, in comparison, 12-months ago, 818 properties auctioned with a 71.7% clearance rate.

Melbourne, on the other hand, auctioned 1,232 properties in the closing week of April. Over this time, this city had a clearance rate of 75.2%. Twelve months ago, 1,404 properties auctioned, but the clearance rate was 73.5%.

Auction Clearance Rates Week Ending 1 May 2017

All Dwellings
State Clearance Rate No. Scheduled Auctions Sold at Auction
Melbourne 79.9% 1232 1087
Sydney 74% 804 630
Brisbane 70% 124 87
Adelaide 65.4% 82 53
Perth 39% 33 13

Source: CoreLogic RP Data


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