Melbourne outpaces Sydney in November property gains: Chris Joye

Australian dwelling values have continued to climb higher in the month of November to date, Coolabah Capital director Chris Joye has noted.

Over the first 21 days of the month, house prices across the five largest capital cities have appreciated 0.4% led by Perth (0.7%), Adelaide (0.6%), Melbourne (0.5%), Brisbane (0.4%) and Sydney (0.2%) according to the latest daily hedonic index data from CoreLogic.

After prices started drifting lower in late April and May, the Aussie housing rebound commenced in September in six of the eight capital cities.

Joye noted the bounce-back picked up steam in October with all cities except Melbourne realising gains.

Joye wrote on Livewire that there is no evidence of a real boom yet.

"The recovery thus far has been gradual," he said.

Coolabah has since March 2020 forecast strong dwelling price appreciation following a modest six-month correction, with total capital gains of at least 10% to 20% expected over the next few years. 

Joye added the locked-down Melbourne market, which unsurprisingly fared worst during this episode, appeared to trough in late October and started generating clear price increases at the end of that month.

"In the November month-to-date, Melbourne has outpaced Sydney in terms of its capital gains.

"This also reconciles with increasingly robust auction market results," he said.

Joye sees a "sustainable housing boom will emerge over time."

"The boom should really grip once property investors flood back into the market in 2021 to capitalise on the advent of "positive gearing" (i.e., where gross rental yields are above the cost of servicing mortgage debt).

"Since bank credit standards are arguably the toughest they have ever been, we are not concerned about bubbles or financial stability risks at this juncture."