Melbourne almost overtakes as Sydney's three-year property boom is over: Domain's House Price Report

Melbourne almost overtakes as Sydney's three-year property boom is over: Domain's House Price Report
Melbourne almost overtakes as Sydney's three-year property boom is over: Domain's House Price Report

The Sydney property boom of the past three years is over, with the harbour city now reporting a sharp decline in house prices over the last quarter. All other Australian capital cities have reported moderate to strong house price growth, except Perth and Darwin which both experienced weakening market activity 

The key findings of the Domain.com.au December Rental Report are: 

  • Record drop in Sydney median house prices over the December quarter 
  • Melbourne and Canberra record highest annual house price growth since 2009  
  • Adelaide, Hobart and Brisbane record stronger house price growth  
  • House price falls in Perth steadying, while Darwin housing market remains weak 

Commenting on the report, Domain Senior Economist Dr Andrew Wilson, said: 

“The higher mortgage interest rates initiated mid-year by financial regulators for both investors and owner-occupiers have demolished the previous booming markets of Sydney and Melbourne, whilst house prices continued to fall in Perth and Darwin as a consequence of the slowdown in the mining sector.

“Other capital city markets, however, are now recording solid results, reflecting improving local economies and restored market confidence.”

Sydney 

Sydney median house prices fell by a dramatic 3.1 per cent over the December quarter – the first fall since June 2012 and the sharpest quarterly decline in house prices reported by the city on record. Despite the record fall over the December quarter, Sydney house prices increased by 14.8 per cent over 2015.

Sydney’s median unit prices also fell steeply over the December quarter, dropping by 2.8 per cent to $655,845. It’s the first quarterly fall since March 2013 and again, the sharpest decline on record. However across the year, Sydney unit prices increased by 8.7 per cent.

“The remarkable Sydney boom we’ve seen over the last three years is now clearly over, with the market unlikely to record any notable house prices growth until at least spring. While the median house price still remains above $1 million (at $1,013,258), if current trends continue it will likely fall below this benchmark by mid-year,” said Domain Senior Economist, Dr Andrew Wilson. 

Melbourne 

The Melbourne median house price increased by 1.8 per cent over the December quarter, recording an annual growth of 14.5 per cent over 2015 – the highest annual result recorded by the city since the 2009 boom and reaching only 0.3 per cent behind Sydney.

Melbourne unit prices increased by 1.3 per cent over the December quarter to $446,046 for an annual increase of 2.4 per cent. While a positive result overall, the annual percentage growth was considerably below the previous year’s result of 5.2 per cent. 

“It’s good news for Melbourne home owners, with the city recording its highest annual growth since 2009. While quarterly growth rates have weakened sharply, the end-of-year results remained positive as local supply and demand drivers remain robust. Melbourne recorded a median house price of $719,486 over the quarter to remain the second highest priced capital city housing market, behind Sydney,” said Domain Senior Economist, Dr Andrew Wilson.

Brisbane 

Brisbane house prices bounced back over the December quarter with the median house price increasing by 1.5 per cent to reach $511,361– up on the 0.7 per cent recorded over the previous quarter and the highest result for the year. 

Brisbane unit prices fell again over the December quarter down by 1.1 per cent to $359,965.  Local unit prices were down by 5.3 per cent over 2015 – the sharpest decline in annual prices since 2000 – 15 years ago. 

“It’s a positive result for Brisbane house owners, with the median house price recording its highest quarterly growth for the year. 

“Unfortunately for unit owners, the record levels of new apartments continue to impact the Brisbane unit market, with supply clearly pushing ahead of demand. This has contributed to a fall in unit prices across the city,” said Domain Senior Economist, Dr Andrew Wilson.

Adelaide

The Adelaide housing market reported another solid result over the December quarter with the median house price increasing by 1.8 per cent to $494,284. The Adelaide median house price increased by 6.7 per cent over 2015, its best annual result since 2007. 

Adelaide unit prices increased strongly by 3.0 per cent over the December quarter to $310,090. Unit prices rose by 5.2 per cent over the year - the highest annual growth rate since 2008.

“It’s a positive story for Adelaide home owners with the city recording  five consecutive quarters of house price growth for the first time since the boom period of 2010. With growth continuing at it’s current pace it is highly likely that the median house price will break through $500,000 by mid-year,”  said Domain Senior Economist, Dr Andrew Wilson.

Perth

Perth house prices have been declining for four consecutive quarters but there may be some relief in sight, with the decline recorded this quarter at a marginal  0.8 per cent, for a median price of $585,369. The Perth median house price is now the lowest recorded by the city since the March quarter 2013, with prices falling by 4.5 per cent over 2015 – the sharpest annual decline since 2008.

Perth unit prices rebounded over the December quarter rising by 1.5 per cent to a median of $388,834. Similar to house prices, Perth unit prices fell by 5.0 per cent over 2015 – the sharpest annual decline since 2011.

“Although Perth’s median house price continues to fall as a result of the declining mining sector, it’s not all bad news. There are early signs suggesting that the rate of decline is moderating, as affordability improves and confidence recovers,” said Domain Senior Economist, Dr Andrew Wilson.

Hobart

Hobart house prices increased strongly over the December quarter — up by 7.9 per cent to a median of $359,837 – the highest quarterly growth rate for over a decade. The December surge in house prices has resulted in an increase of 8.7 per cent over 2015 — the highest annual result for the local market since 2009. 

Although Hobart unit prices fell by 3.3 per cent over the December quarter, they increased by 7.1 per cent over 2015 to a median of $268,401. 

“The Hobart housing market delivered a strong result in the December quarter, especially given Hobart house prices have increased by just 5.8 per cent over the past 5 years. This indicates further potential for growth as the local economy improves and positive consumer sentiment builds,” said Domain Senior Economist, Dr Andrew Wilson. 

Canberra

Canberra’s median house price increased by 4.3 per cent over the December quarter to $652,307 – its highest quarterly growth rate since December 2009. It’s a great result for the capital’s housing market, which has seen a median house price increase of  9.0 per cent overall in 2015.

The Canberra unit market also experienced positive growth recording a modest increase of 0.8 per cent over the December quarter to reach a median unit price of $405,110. Despite December’s small rise, Canberra median unit prices fell by 2.2 per cent over 2015. 

“A really good story in Canberra this quarter, with the local market continuing to rise after a subdued period of buyer activity. Canberra’s house price growth of 9.0 per cent over the year is behind only that of the Sydney and Melbourne markets and is the best local annual result since 2009.

“The fall of unit prices across 2015 demonstrates the high levels of new apartment construction predictably moving supply ahead of demand in the Canberra market,” said Domain Senior Economist, Dr Andrew Wilson. 

Darwin

Darwin house prices fell again over the December quarter, dropping by 2.0 per cent to reach $636,854. 

Despite recent sharp falls, the Darwin median house price has fallen by just 1.0 per cent over the past year, an improvement on the previous year’s decline of 5.4 per cent.

Darwin unit prices fell slightly over the December quarter — down by 0.4 per cent to reach a median of $407,132. Unit prices decreased by 2.0 per cent over 2015 which was an improvement on the previous year’s fall of 6.5 per cent. 

“While the local economy remains strong, the Darwin housing market continues to be impacted by the decline in the resource economy and the end to the significant demand driver of the fly-in-fly-out mining workforce. Darwin unit prices are now the lowest since June 2012, reflecting the oversupply from record levels of apartment construction,” said Domain Senior Economist, Dr Andrew Wilson. 

Tags: 
Melbourne House Price

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