The CoreLogic June Home Value Index results reported a 0.5% rise in capital city dwelling values over the month with five capitals recording a fall in dwelling values while Sydney, Melbourne and Hobart values show another substantial rise.
Higher dwelling values across Australia’s two largest capital cities continued to push the CoreLogic Hedonic Home Value Index to new record highs, with dwelling values across the combined capital cities rising by 0.5% in June to be 8.3% higher over the past twelve months.
The June results continued to show a rebound in housing market conditions after CoreLogic reported weaker results for the final quarter of 2015 when the combined capitals’ index was down 1.4%. CoreLogic Asia Pacific research director Tim Lawless said, “Importantly, the pace of capital gains in June was substantially lower than the April and May results when CoreLogic reported a 1.7%, and 1.6% month-on-month lift in capital city dwelling values.”
“The monthly growth rate reduction is likely to be very much welcomed by state and federal government policy makers and regulators who may be concerned about a sustained rebound in capital gains.”
“As an example, home values in Sydney have been rising for four years, and have increased by a cumulative 59% over this time frame. Melbourne dwelling values have been rising for the same length of time and have moved 41% higher over the growth cycle to date.”
“The combined capitals’ headline result was driven by a strong 1.2% rise in Sydney dwelling values, and a 0.8% gain across Melbourne’s housing market. Hobart values also showed strong conditions with dwelling values moving 1.8% higher over the month,” Mr Lawless said.
Index results as at June 30, 2016
Although the headline results are positive, five of Australia’s eight capital cities recorded a decline in dwelling values in June. Monthly declines of more than 1% were recorded in Darwin (-1.6%), Adelaide (-1.3%) and Canberra (-1.1%), while the falls in Brisbane (-0.1%) and Perth (-0.8%) were less severe.
Mr Lawless said, “While the higher rates of capital gains in Sydney and Melbourne can be tied back to strong economic conditions, and high rates of population growth, the same cannot be said for Hobart where economic conditions and migration rates are gradually improving from a low base. The strength in the Hobart market comes after a long period of underperformance, where home values in the city increased by only 1.4% per annum over the past ten years. Potentially, the Hobart housing market is being fuelled by the sheer affordability of housing and a renewed trend towards Melbourne and Sydney buyers unlocking their equity to make lifestyle housing purchases.”
Based on the CoreLogic Index results over the first six months of the year, capital city dwelling values have moved 5.5% higher during 2016, with the most substantial capital gains located in Sydney (8.9%), Hobart (8.5%) and Melbourne (5.8%).
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