Australia's smaller markets paint a lacklustre picture: Matthew Hassan

GUEST OBSERVATION

Latest dwelling price data shows continued solid growth nationally in early 2015 with some measures even indicating a slight pick-up over the last six months.

Beneath the surface though the city and segment detail shows strong gains are confined to Sydney houses, Sydney units and Melbourne houses with much more subdued price gains everywhere else and some notable areas of weakening.

Our preferred metric for dwelling prices is the six month annualised growth rate due to excessive volatility in the monthly and quarterly data. On this basis, as at 1 May the main ‘all dwelling’ price measures are showing (all series seasonally adjusted by Westpac):

• CoreLogic RP Data monthly to April: 11.8% six month annualised (8.1% year);
• APM figures to Q1: +8% year six month ann’d (7.4% year);
• Residex monthly to February: 6.3% year six month annualised (7.2%year);

Note the ‘official’ ABS price data, which was the least timely to begin with is now being published six weeks later, with Q1 preliminary estimates not due until 23 June(!).

To control for volatility issues across different measures, Westpac tracks a composite of the four main providers. These highlight the degree to which performances are now diverging across the major capital cities.

Not surprisingly, at the top end, the Sydney market continues to track a strong 13.8% annualised pace, in line with that seen throughout 2014.

Melbourne is tracking a more subdued 5.5% pace, in line with the second half of 2014 but down on the previous 12 months. Notably, within the Melbourne market, houses are significantly outperforming ‘units’ with growth tracking in the 5-10% and 0-5% ranges respectively.

Brisbane and in particular Perth are notably weaker. Prices have virtually stalled flat in Brisbane (with just a 1.1% annualised rate of growth the last 6mths) and are showing significant declines in Perth (falling at a 3.8% annualised pace over the last 6 months).

The same lacklustre price picture is evident across Australia’s smaller markets. Indeed, on a combined basis six month price growth is flat across both the smaller capital cities and regional areas of the major states.

Matthew Hassan is senior economist with Westpac.