Sydney House Values Fall in September as Capital Gains Continue to Lose Steam

The September results confirmed that dwelling values edged 0.2% higher across Australia over the month, led by a 0.3% rise in capital city values and a 0.1% gain across the combined regional markets. The latest figures take national dwelling values 0.5% higher over the September quarter, which is the slowest rate of quarter-on-quarter growth since June 2016, and national values are up 8.0% over the past twelve months. 

According to analysis by CoreLogic head of research Tim Lawless, the combined capital city trend growth rate is clearly losing steam with dwelling values rising by 0.7% over the September quarter and well down from the recent peak rate of quarter-on-quarter growth which was recorded at 3.5% over the December 2016 quarter. Mr Lawless said, “This slowing in the combined capitals growth trend is heavily influenced by conditions across the Sydney market where capital gains have stalled.” 

Index results as at September 30, 2017

2017-10-02-indexresults

The September quarter saw Sydney dwelling values edge 0.2% higher and values slipped 0.1% lower over the month. Sydney’s quarterly result was the slowest since values declined by 2.2% over the March quarter of 2016 and it’s the first month-on-month decline after 17 months of consistent capital gains.

Interestingly, across the Sydney housing market, it was the detached housing sector that pulled the monthly and quarterly growth rates lower. While unit values are also appreciating at a slower rate, detached housing values were 0.3% lower over the month of September and 0.2% lower over the quarter while unit values recorded a subtle rise.

For the Sydney housing market, concerns around unit oversupply is less evident compared with the Brisbane unit sector, or to a lesser extent with Melbourne. Mr Lawless said, “Potentially the affordability challenges facing Sydney buyers within the detached housing sector are pushing more demand towards the medium to high density sector, where, based on median values, houses are almost $290,000 more expensive than units.”

Melbourne’s housing market is also showing slower growth conditions, however growth remains relatively resilient compared with Sydney. Dwelling values were almost 1% higher over the month of September and rose by 2.0% over the September quarter.

Mr Lawless said, “The stronger housing market conditions in Melbourne are supported by auction clearance rates which have consistently remained above 70%. Additionally, advertised stock levels remain remarkably low and private treaty sales continue to sell rapidly, averaging 30 days on market.” 

Hobart further cemented its position as the best performing housing market after a recent history of sluggish growth conditions.  The past twelve months has seen Hobart dwelling values surge 14.3% higher; the highest annual growth rate since 2004. Despite the strong capital gains, the cost of housing remains substantially lower than any other capital city with a typical house value of $412,340 and a median unit value of just under $320,000.