Despite a seasonally strong result over the month of June, the CoreLogic Hedonic Home Value series shows capital gains over the second quarter of 2017 is losing steam.
The CoreLogic Home Value Index recorded a recovery from the 1.1% fall in May, with a 1.8% rise in capital city dwelling values over the month of June. According to CoreLogic head of research Tim Lawless, “This stronger month-on-month reading can be partially explained by the seasonality in the monthly growth rates. Adjusting for this effect suggests an easing trend in housing value growth has persisted through the second quarter of 2017.”
The June quarter results showed that capital city dwelling values were 0.8% higher across the combined capitals index; the slowest quarterly rate of growth since December 2015 when the combined capitals index fell by 1.4%.
Mr Lawless said, “This trend towards lower capital gains across the combined capitals index is mostly attributable to softer conditions across the Sydney housing market, where quarter-on-quarter growth was recorded at 0.8% over the June quarter; down from 5.0% over the March quarter. In contrast, the quarterly trend in Melbourne has been more resilient, with growth easing from 4.2% over the March quarter to 1.5% over the three months ending June.”
For Sydney, Mr Lawless said the more pronounced slowdown is supported by weaker auction clearance rates which have been tracking in the high 60% range across the city over the last three weeks of June, while in Melbourne, clearance rates have moderated but remained above 70%. He said, “Both markets experienced auction clearance rates consistently in the high 70% to low 80% range over the March quarter.”
Across the combined capitals, the annual pace of capital gains has eased from 12.9% three months ago to 9.6% at the end of June 2017. Sydney’s annual growth rate has slowed to 12.2% over the twelve months ending June 2017, down from a recent high of 18.9% three months ago. Melbourne’s annual growth rate is now the highest of any capital city, surpassing Sydney’s annual rate of growth despite easing from 15.9% three months ago, to 13.7% over the twelve months ending June 2017.
Brisbane now has the third highest quarterly pace of capital gains with dwelling values 0.5% higher over the June quarter. Brisbane’s growth is entirely attributable to a 0.8% rise in house values which offset a 2.4% fall in unit values over the quarter. Dwelling values slipped lower across the remaining capital cities, except Perth, which posted virtually flat growth conditions (+0.1%) over the June quarter.