CoreLogic data for November shows property prices rose in every city except Melbourne, as increased apartment supply begins to bite.
CoreLogic's November Home Value Index 2016 shows that property prices rose in November in every city except in Melbourne, as increased apartment supply begins to bite.
The data shows that combined capital city property prices rose 0.2% in November, taking the current growth cycle to 4.5 years.
Darwin property prices grew the most strongly during the month, rising 3.7%.
Tim Lawless, CoreLogic head of Research, said transaction numbers were up in Darwin.
"The November results show a rise in transaction numbers across the Darwin market over recent months, supporting the moderate improvement in market conditions that (CoreLogic's) hedonic index is showing," he said.
Melbourne property prices contracted by 1.5%, making the city the worst performer for the month.
Lawless explained the Melbourne result. "Delving into the Melbourne results in more detail showed that unit values were down a larger 3.2% in November, while Melbourne house values declined by 1.3% over the month," he said.
Sydney is still the most expensive capital city, with a median property price of $845,000.
Lawless said Sydney property prices have risen 67.3% since the current cycle began in 2012, and Melbourne prices have risen 46.3%. Though Perth and Darwin prices are up for the cycle, they "have broadly declined" since 2014, he said.
Source: CoreLogic.
Lawless said that the increase in apartment supply is beginning to weigh on the market.
“It appears that higher unit supply is progressively weighing down the capital gains across Melbourne’s unit sector, with annual capital gains tracking at 3.9% for Melbourne units compared with a 12.2% annual gain in Melbourne house values,” he said.
“A similar trend can be seen in Brisbane," said Lawless. Brisbane house prices have risen 4.3% in the last twelve months, but apartment prices have slumped.”
“With the unit supply pipeline remaining substantial, we expect to see a continuation of weaker market conditions across those unit markets where high supply levels are dampening the prospects for higher value growth,” Mr Lawless said.
Rental yields are at a record low in November across the combined capital cities as apartment prices increase more quickly than rents. "The average gross rental yield across combined capital city dwellings is now recorded at 3.2%, down from 3.5% a year ago, and 4.1% five years ago," according to CoreLogic.
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