Annual capital city growth trend reaches new high

Capital city dwelling values rose a further 1.4% in February, with Sydney continuing as the overall capital gains leader.

The monthly CoreLogic Hedonic Home Value Index reported a further rise in the value of capital city dwellings in February, with values rising 1.4% over the month.  The strong capital gain over February was led by Canberra (+3.2%) and Sydney (+2.6%), with Melbourne (+1.5%) and Hobart (+1.0%) also returning significant increases.  In contrast, dwelling values were down over the month across Darwin (-4.3%), Perth (-2.4%) and Brisbane (-0.4%).

Index results as at February 28,2017

2017-03-01--indices

Growth conditions have accelerated since mid-2016

CoreLogic head of research Tim Lawless said, “At a combined capital city level, growth conditions have been rebounding since the middle of last year when, on two separate occasions, interest rates were cut, and investor demand commenced trending higher.” 

“Prior to capital gains accelerating half way through last year, the growth trend had been moderating, reaching a cyclical low point over the twelve months ended July 2016 when the annual change in capital city dwelling values slowed to 6.1%.”

A new cyclical high for annual growth rates

According to Mr Lawless, the February results mark a new high point in the current growth cycle, with capital city dwelling values increasing by 11.7% over the past twelve months.

He said, “The annual growth rate across the combined capitals hasn’t been this strong since the twelve months ending June 2010. 

“In Sydney, where the annual rate of growth is now 18.4%, this is the highest annual growth rate since the twelve months ending December 2002 when the housing boom of the early 2000’s started to slow.”

The current growth cycle is approaching 5 years in duration

The latest CoreLogic results take the current housing growth cycle into its 58th month.  Since capital city dwelling values started to rise in June 2012, capital city dwelling values have increased by a cumulative 47.3%, ranging from a 74.9% capital gain in Sydney, to a net rise of 6.0% in Perth.

Sydney, and to a lesser extent, Melbourne, have remained at the top of the capital gain tables over the past two cycles.  Since the beginning of 2009, Sydney dwelling values have more than doubled, rising by 104.5% while Melbourne values are 87.7% higher.  The next best performing capital city over the same period was Canberra where dwelling values have risen by a comparatively modest 37.4%.

High capital gains:  good news for home owners but a growing challenge for prospective buyers

Mr Lawless said, “The strong growth conditions across Sydney have provided a substantial wealth boost for home owners, however, the flipside is that housing costs are becoming increasingly out of reach. This is especially true for price-sensitive segments of the market such as first time buyers and low income families.”

“Affordability challenges are most pronounced across the Sydney housing market where, based on September 2016 data, dwelling prices are almost 8.5 times higher than gross household incomes.  The second most expensive capital city, Melbourne, has a dwelling price to income ratio of 7.1.”


About CoreLogic

CoreLogic Australia is a wholly owned subsidiary of CoreLogic (NYSE: CLGX), which is the largest property data and analytics company in the world. CoreLogic provides property information, analytics and services across Australia, New Zealand and Asia, and recently expanded its service offering through the purchase of project activity and building cost information provider Cordell. With Australia’s most comprehensive property databases, the company’s combined data offering is derived from public, contributory and proprietary sources and includes over 4.4 billion decision points spanning over three decades of collection, providing detailed coverage of property and other encumbrances such as tenancy, location, hazard risk and related performance information.

With over 20,000 customers and 150,000 end users, CoreLogic is the leading provider of property data, analytics and related services to consumers, investors, real estate, mortgage, finance, banking, building services, insurance, developers, wealth management and government. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and geo spatial services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. CoreLogic employs over 650 people across Australia and in New Zealand. For more information call 1300 734 318 or visit www.corelogic.com.au.

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