Property prices at record highs
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Aug 1, 2016
Property prices at record highs
Property prices in Australia's combined capital cities have now been growing for 50 consecutive months, but the growth is patchy, with Melbourne and Sydney accounting for most of the gains, says CoreLogic.
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Photo by Weyne Yew on UnsplashMelbourne property prices have gained 42% in the current growth cycle.
Property markets have begun the new financial year strongly, with CoreLogic's July Home Value Index showing continued gains in capital city prices in July. CoreLogic’s aggregate of Australia’s eight capital city property prices rose 0.8% over the month to a new record high.
However, the overall gain masks a fall in property prices in four of Australia’s eight capital cities over the month.
And the rate of growth is slipping. The annual rate of growth hit a recent peak of 11.1% in October last year, but has fallen back to a more sustainable 6.1%.
Sydney and Melbourne saw the annual rate of property price growth ease, with Sydney prices rising 9.1% over the year ending July (compared with a peak of 18.4% for the year ending July last year), and Melbourne prices gaining 7.5% (compared with a 14.2% gain for the year to September last year).
Darwin property prices fell 7.6% for the 12 months to the end of July, and Perth values fell 5.6%. Darwin and Perth were the only two capital cities to record declines in property prices for the year.
The current combined capital city property growth cycle has now been running for 50 months, and prices have surged 38.3%.
CoreLogic head of research Tim Lawless said, “This demonstrates the strength in the Sydney and Melbourne growth trend, with dwelling values across the two largest capitals recording a cumulative 61.3% and 42.0% over the cycle to date.”
Hobart, where growth has recently accelerated, has seen prices rise 17.6% over the cycle, followed by Brisbane (17.4%), Adelaide (14.3%) and Canberra (12.4%).
Lawless said, “The recent moderation in the rate of capital gains should be viewed as a positive sign that growth in dwelling values may be returning to more sustainable levels.”
But even with moderating prices, Lawless said incomes are not growing nearly as fast as property prices, so affordability remains a problem.
“Using Sydney as a case in point, the Australian National University estimates that Sydney household incomes have grown by approximately 4.5% per annum since June 2012 while dwelling values are up 12.1%,” he said.
“The latest ABS housing finance data shows that first home buyers in New South Wales now comprise of a record low 10.4% of all new owner occupier housing finance commitments,” said Lawler.
Capital city rents fell 0.6% over the year to July.
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