Capital City Dwelling Values Increasing at Fastest Annual Rate Since May 2010

Capital city dwelling values moved 1.4% higher over the month, taking the combined capital city index to an annual growth rate of 12.9%; the highest annual rate of growth since the twelve months ending May 2010.

Four of Australia’s eight capital cities are now showing an annual growth rate in dwelling values higher than 10%, while Perth and Darwin values continue to trend lower on an annual basis.

According to CoreLogic head of research Tim Lawless, the March results highlight the continued resurgence in the pace of capital gains.

He said, “This became evident through the second half of 2016, fueled largely by lower mortgage rates and a rebound in investment activity.  Since June last year, the CoreLogic capital city hedonic index has increased by 9.3%.”

“While Sydney and Melbourne recorded the strongest growth conditions, the annual rate of capital gains has also moved into double-digit growth in both Hobart (+10.2%) and Canberra (+12.8%).” 

Index results as at March 31, 2017

2017-04-03--Indices

Conditions remain diverse across regions and housing types

Demonstrating the diversity across capital city markets, on an annual basis, dwelling values in Perth fell by -4.7% and by -4.4% in Darwin where economic conditions and migration trends remain weak across both cities.  Adelaide and Brisbane also saw dwelling values continue to trend higher at a sustainable pace with increases of 3.4% and 3.7% respectively in these cities over the past twelve months.

According to Mr Lawless the diversity of performance between houses and units is also a current key feature of the housing market.  Across the combined capitals index, house values were 13.4% higher over the past twelve months compared with a 9.8% rise in unit values. 

He said, “The disparity in growth rates is more significant in those cities where high new unit supply is more apparent.  In Melbourne, house values were 17.2% higher over the past twelve months compared with a 5.2% increase across the unit sector.  Similarly, in Brisbane, house values were 4.0% higher over the past twelve months compared with a 0.2% rise in unit values over the same period.” 

“The weaker growth conditions within the unit markets’ sector reflect heightened levels of new supply across specific inner city precincts and also suggests that consumer confidence has been negatively affected by the warnings of a potential unit oversupply.”

Whether such strong growth conditions can be sustained much longer is yet to be seen according to Mr Lawless.

“Given the recent policy announcements from the Australian Prudential Regulation Authority (APRA) are aimed at dampening investment related credit demand, we can expect lending conditions for investment purposes will tighten, particularly for investors with small deposits or those applying for an interest only loan. Additionally, higher mortgage rates handed down by Australia’s major banks may contribute towards cooling some of the exuberance being seen in the largest capital city housing markets.”

“Furthermore, organic constraints in the market are becoming more pronounced. As examples, record-low rental yields, which imply dwelling values are out of balance with rents, and heighted affordability constraints are preventing some prospective buyers from participating in the market.”  

“Record-high levels of apartment supply are also likely to act as a brake on capital gains in those precincts where supply levels are high.”


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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