National property market becoming more overvalued: Moody's Analytics

National property market becoming more overvalued: Moody's Analytics
National property market becoming more overvalued: Moody's Analytics

Home values are estimated to be around 8.4 percent overvalued, with property in Melbourne the most overvalued nationwide according to the CoreLogic-Moody's Home Value Index Forecast.

The report said values in Melbourne are around 20 percent overvalued compared with their fundamental value.

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National property market becoming more overvalued: Moody's Analytics

"This degree of overvaluation is greater than in Sydney, where properties are estimated to be overvalued by 14 percent," the report said.

"Part of the reason for this diver- gence is that income growth in Sydney has also outpaced Melbourne’s. Since 2013, in- comes have grown 0.7 percent per quarter in Melbourne compared with 1.1 percent in Sydney.

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National property market becoming more overvalued: Moody's Analytics

 

"However, unlike their capital cities, the rest of New South Wales and Victoria have seen lower house price growth.

"Home values have followed their fundamentals closely, but both states are marginally undervalued. Victoria is slightly more so at 6.5 percent, and NSW is 4 percent undervalued.

"In other capital cities, the recent pickup in the ACT housing market—around 9 percent y/y in September—has caused home values to become marginally overvalued at around 7 percent. Similarly, Adelaide’s housing market is around 5 percent overvalued compared with fundamentals.

"Conversely, Brisbane is one of the only capital cities where home values are fairly valued, as actual house price appreciation has tracked fundamental prices closely."

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