In an address to the Australian Financial Review Business Summit, RBA Governor Philip Lowe suggested that significant inconsistencies between cities make it impossible to view the market as a single, nationwide entity.
For instance, although Sydney and Melbourne showed sharp declines, other cities like Hobart and Canberra are impressively strong.
“Given these contrasting experiences, it is pretty clear that there is no such thing as the Australian housing market,” Lowe declared. “What we have is a series of separate, but interconnected, markets.”
His comments come as owners and investors continue to speculate about the possibilities of further market instability. The good news is, there isn’t too much to worry about at the moment.
Lowe confirmed that while last year’s decline was unusual, markets are starting to stabilise in 2019.
What’s more, CoreLogic, Australia’s leading provider of property market research, reports dwelling values, on the whole, are 18% higher than they were five years ago.
So, with the notion of an ‘Australian housing market’ out the window for now, what does each market look like?
Average dwelling values by major city
|Index results as at February, 2019|
|Change in dwelling values|
|City||Month||Qtr.||Annual||Total return||Median Value|
Highlights over the three months to February 2019:
- Best performing capital city: Hobart +1.1%
- Weakest performing capital city: Darwin -5.1%
- Highest rental yield: Darwin 6.0%
- Lowest rental yield: Sydney 3.4%
Sydney and Melbourne housing markets
Lowe said the downturn in these two cities is “not surprising” given they’ve
He suggested the decline could be due to a number of factors affecting demand, not limited to changes in foreign investment trends, building booms and credit tightening (you may want to read his more in-depth explanation here).
Having said that, homeowners in Australia’s two biggest cities should take comfort in the fact that the markets are cyclical, and it is likely to trend upward again – it’s just hard to know when.
Hobart housing market
On the opposite end of the scale to Sydney and Melbourne, you have humble Hobart.
If you own or bought property here in the past decade, you’re probably pretty stoked right now. The market in Tassie is the strongest nationwide with house prices rising at a rapid rate. Hobart continues to slay national averages, which most recently recorded a 6.3% in the market while Hobart saw a 7.2% rise.
While renters have found themselves facing a crisis, investors have never been happier with rental prices making giant strides.
Even though growth in Hobart slowed ever-so-slightly in February, surrounding areas, as well as those in the north of the state (hello, Launceston!) have also showed gains in the past year.
Adelaide, Brisbane and Canberra housing markets
Lowe described these cities as being the most stable cities in the Australian housing market in recent years, with no significant peaks or troughs to report.
Over the past year, Brisbane stayed steady, while both Adelaide and Canberra saw slight increases.
Looking to invest in these cities? It might be a good time! While most parts of Adelaide and Canberra are proving to be safe bets, those shopping in Brisbane should look to Brisbane East and West, as well as up to Moreton Bay, with these areas showing the most growth over the past year.
Perth and Darwin housing markets
Lowe reports no news in Perth and Darwin but that doesn’t exactly mean no news is good news.
In Perth and Darwin, the housing markets have been weak for some time, affected by the swings in population and income associated with the mining boom, he stated.
While Perth peaked relatively early (2014), it has now slowed right down thanks largely to an oversupply of housing and simply not enough demand. Property investment website, PropertyUpdate, claims the city is not likely to see any growth in the market soon unless something can be done to create more jobs and encourage people to make the move west.
Words by Rebecca Mitchell.
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