June's ongoing dwelling price growth in Sydney and Melbourne: Tim Lawless

June's ongoing dwelling price growth in Sydney and Melbourne: Tim Lawless
June's ongoing dwelling price growth in Sydney and Melbourne: Tim Lawless

Capital city dwelling values in Sydney, Melbourne and Hobart have had a substantial rise according to the June Home Value Index from CoreLogic.

Dwelling values across the combined capital cities rose by 0.5 percent in June to be 8.3 percent higher over the past twelve months.

CoreLogic research director Tim Lawless said the June results continued to show a rebound in housing market conditions after weaker results were reported for the final quarter of 2015 when the combined capitals’ index was down 1.4 percent.

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June's ongoing dwelling price growth in Sydney and Melbourne: Tim Lawless

He said the pace of capital gains in June was substantially lower than the April and May results when CoreLogic reported a 1.7 percent, and 1.6 percent 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," he said. 

“As an example, home values in Sydney have been rising for four years, and have increased by a cumulative 59 percent 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 percent rise in Sydney dwelling values, and a 0.8 percent gain across Melbourne’s housing market. Hobart values also showed strong conditions with dwelling values moving 1.8 percent higher over the month.

"Housing market conditions in both Perth and Darwin are suffering from reduced housing demand resulting from a sharp downturn in migration and weaker employment opportunities. Rental rates have also fallen substantially in both cities, highlighting that lower housing demand is not confined to home buyers but also renters."

Monthly falls of more than 1 percent were recorded in Darwin (-1.6 percent), Adelaide (-1.3 percent) and Canberra (-1.1 percent), while the falls in Brisbane (-0.1 percent) and Perth (-0.8 percent) were less severe.

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June's ongoing dwelling price growth in Sydney and Melbourne: Tim Lawless

Lawless said some positive news for Sydney buyers is that there are early signs that Sydney’s housing market may be starting to turn in favour of the buyer.

“We’re seeing homes in the city taking longer to sell and vendors are starting to offer larger discounts on their asking prices in order to make a sale," he said.

"The typical Sydney home is now taking 40 days to sell compared with 26 days a year ago and discounting rates have risen from 5.5 percent a year ago to 5.6 percent.”

“In balance, Australia’s two largest cities are facing increased affordability challenges that are likely to negatively impact the trajectory of dwelling values and activity as more prospective buyers are blocked from the market."

According to the report, capital city dwelling values have increased by 8.3 percent over the financial year which is lower than what was recorded over the previous two financial years when capital city dwelling values were 9.8 percent higher over 2014/15 and 10.1 percent higher in 2013/14. The recent peak rate of annual growth was recorded in July last year when capital city dwelling values were 11.1 percent higher over the preceding twelve month period. 

 

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Residential Market Dwelling Values

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