Perth rents have dropped more spectacularly down 6.4 per cent on this time last year.
Collated figures released by the Real Estate Institute of Australia (REIA) reveals strong growth in property markets amongst the eastern Capitals whilst Perth commenced its downward adjustment.
The Sydney market is in the midst of a spectacular surge in median house price growth moving up 4.9 per cent in the March quarter reflecting an 18 per cent increase over the past twelve months. The annual return (growth in median price together with percentage return from net rental income) on a three bedroom house in Sydney is currently running at 20.3 per cent. Comparatively, Perth has managed a mere 0.5 per cent return using the same measure.
However, property investment has always been a long term play and Perth comes only second to Darwin in the capital city field with average annual returns for a typical three bedroom house over the past ten years at 11 per cent compared to Sydney’s 7 per cent, Melbourne’s 8.8 per cent and Brisbane’s 7.8 per cent. Darwin is some lengths ahead at 13.4 per cent. Sydney’s median house price hit $930,000 in the March quarter prompting valid concerns about housing affordability in that market. Sydney home buyers are now looking further afield with renewed enthusiasm in property markets in Woollongong and Newcastle where the median house price is a more comfortable $520,000 and $440,000 respectively.
Melbourne’s median house price growth also impressed over the March quarter with a lift of 3.5 per cent to $688,000, a 10 per cent rise over the past twelve months with most of the demand in the inner and middle city areas.
Brisbane’s median house price fell a moderate 1.5 per cent although across the year, prices have risen 3.3 per cent. Brisbane’s median house price is at $475,000 up marginally from $450,000 five years ago.
Adelaide’s slow and steady upward price trajectory continues for houses up 0.1 per cent for the quarter although whilst demand for houses in the inner city caused prices there to rise 9.7 per cent, apartment values dropped 6.3 per cent over the same period.
Hobart remains the most affordable capital city with a median house price at $382,500, up 6.3 per cent in the quarter over 582 sales.
Darwin shot up 6.8 per cent across 275 house sales for the quarter at a median house price of $625,000.
Canberra also enjoyed some growth albeit a moderate 0.7 per cent for houses but apartments and other dwellings dropped 2.5 per cent for the quarter.
Perth, then, sits alone somewhat with the most significant fall in median house price over the March quarter down 2.7 per cent to $535,000. All other dwellings including apartments also fell back by 1.1 per cent despite the supply of higher valued apartments throughout the inner city. Perth rents have dropped more spectacularly down 6.4 per cent on this time last year although downward adjustment has slowed with rents actually rising over the March quarter in isolated city and some regional areas.
In this low interest environment, the strong investor and home buyer activity in the Sydney and, to a lesser extent, in Melbourne is likely to continue in the short term. Meanwhile, the Perth market is likely to struggle under the weight of increased supply and soft demand although prices are not likely to fall back much further and may even swing back up through increased trade up activity.