Growth conditions across the national housing market for 2015 can best be described as diverse.
At the end of 2015 we have seen the total value of Australian residential property reach an estimated $6.3 trillion, up from $5.7 trillion a year earlier, easily making residential property the nation's single largest asset class. Approximately $283 billion worth of housing stock transacted over the year across roughly 500,000 house and unit sales.
Growth conditions across the national housing market during 2015 can best be described as diverse. While the headline figures indicated that the combined capital cities recorded strong capital gains, the reality was that Sydney and Melbourne were the only capital cities to see substantial increases in values. While the CoreLogic RP Data Home Value Index showed combined capital city home values rose by 8.7% over the 12 months to November 2015, only Sydney (12.8%) and Melbourne (11.8%) recorded double digit growth. Brisbane (4.0%), Adelaide (3.3%), Hobart (1.1%) and Canberra (4.5%) each recorded relatively moderate value rises while values fell by -4.1% and -4.2% respectively in Perth and Darwin.
Index results as at November 30, 2015
Regional housing market performances were also quite diverse with coastal lifestyle markets typically recording value rises whilst markets linked to the resources sector have continued to see values and transaction activity slump. As the year progressed we have seen the rate of value growth across the capital cities start to slow culminating in value falls in Sydney and Melbourne over the past three months. We have also seen lending criteria tightened significantly by lenders, particularly to investors, and this has resulted in a sharp slowdown in lending to domestic investors over recent months.
First home buyers have continued to show little sign of a resurgence however there may be some hope next year given a reduction in competition from investors. Meanwhile, housing construction activity is booming with a substantial pipeline of new construction still to be delivered. We are seeing more units, particularly high-rise units, approved for construction than ever before. Over the past 12 months there have been 116,111 houses approved for construction and 117,072 units.
As we head into 2016, early signs indicate value growth in Sydney and Melbourne is slowing, whether this results in further value falls remains to be seen, however the rate of appreciation next year is likely to be more moderate than the year just gone. Elsewhere it looks as though housing market conditions are starting to pick-up in South-East Queensland and potentially other markets like Canberra and Hobart as well. Of course the changed lending environment will continue to be a factor in the market in 2016, however, interest rates are set to remain at their historically low setting which will continue to spur demand across the housing market.