Capital city home values rise in November

The CoreLogic November Hedonic Home Value Index results out today show a rise in dwelling values across every capital city excluding Melbourne over the month.

Throughout November, capital city dwelling values rose by 0.2%.  While the headline results remained in positive growth territory, the monthly capital gain reading was also the softest result since December 2015 when capital city dwelling values were unchanged over the month.  The combined regional areas of Australia showed a weaker result with house values falling by 0.2% over the month.

According to Mr Lawless, the soft performance across the combined capital city reading was attributable to a 1.5% fall in the Melbourne index, while all other capital cities recorded a positive month-on-month result.  He said, “Delving into the Melbourne results in more detail showed that unit values were down a larger 3.2% in November, while Melbourne house values declined by 1.3% over the month.” 

The November figures show that capital city dwelling values rose by 1.7% over the three months of spring; a substantial improvement over last year.  Spring 2015 saw capital city dwelling values fall by 0.2%, with auction clearance rates dipping below 60% in late November and early December.  In contrast, auction clearance rates held firm in the mid-70% range throughout spring this year, with Sydney clearance rates holding around the 80% mark over the past three months.

Index results as at November 30, 2016

On an annual basis, every capital city except for Perth is now showing a positive annual trend in dwelling value growth.  The highest annual growth rate is evident in Sydney and Melbourne where dwelling values are now 13.1% and 11.3% higher respectively, reflecting a steeper upwards trajectory in growth over the second half of the year.  The Hobart and Canberra markets have also seen some acceleration in growth rate trends with dwelling values up 8.5%, and 8.4% respectively over the past twelve months.

For the first time since February 2015, Darwin’s annual growth rate has moved back into the black and recorded a 1.1% rise in dwelling values over the past year. Mr Lawless notes that results for smaller cities such as Darwin, can tend to show higher levels of volatility.

Mr Lawless said, “The November results also show a rise in transaction numbers across the Darwin market over recent months, supporting the moderate improvement in market conditions that the hedonic index is showing.” 

Currently the national growth cycle has been in play for 4.5 years, with capital city dwelling values rising by 42.2% over the cycle to date.

Mr Lawless said, “Disaggregating this growth figure highlights the diversity in market conditions with Sydney and Melbourne at one end of the spectrum experiencing an increase in dwelling values over this period of 67.3% and 46.3% respectively, while at the other end of the spectrum, Perth and Darwin values have broadly declined since 2014.  Perth values are 6.9% higher since the cycle commenced in June 2012, while Darwin values are 13.8% higher over this period.” 

“It appears that higher unit supply is progressively weighing down the capital gains across Melbourne’s unit sector, with annual capital gains tracking at 3.9% for Melbourne units compared with a 12.2% annual gain in Melbourne house values.”