Combined capital city home values rose in September, but what happened in your city?
Over the month, combined capital city home values increased by 0.9% and increased across all cities except for Adelaide, Hobart and Darwin. CoreLogic RP Data’s latest estimate of the overall value of housing is currently $6.2 trillion; making it the largest asset class in Australia by a wide margin.
The CoreLogic RP Data combined capital city index recorded property value growth of 4% from July to September 2015, and growth of 11% over the past 12 months. To give this annual growth some context, at the same time a year ago growth was 9.3%. Although value growth is stronger than a year ago, it’s lower than the recent peak in of 11.5% over the 12 months to April 2014.
Capital city growth
Sydney and Melbourne have been the standout cities for value growth over the past year despite the low growth in Sydney in September. Over the past 12 months Sydney home values have increased by 16.7% and Melbourne home values have risen by 14.2%. This represents the fastest annual pace of growth for Melbourne at any time over the last few years.
Brisbane has recorded the third highest annual rate of growth at 4.6% while Canberra is the only other capital city to have seen values rise over the year, up 0.6%. Across the remaining four capital cities home values have fallen, down -0.3% in Adelaide, -0.9% in Perth, -0.2% in Hobart and -3.9% in Darwin.
House and unit growth
Detached house values have continued to rise at a faster pace than unit values over the past year in all capital cities except for Hobart. Across the combined capital cities house values have increased by 11.6% compared to a 7.3% rise in unit values.
A number of cities have recorded a large disparity between house and unit value growth with Melbourne recording the greatest gap. Over the past 12 months, Melbourne house values have increased by 15.6% while unit values have increased by 3.7%.
Historically detached houses have demonstrated a higher rate of capital gain than the unit sector. The instances where unit value growth has outstripped houses has been in a housing market downturn where unit values have typically fallen at a more moderate pace than houses. The current slower growth conditions for units is most likely linked to the fact that there is a record high level of new unit approvals / off the plan sales creating more moderate growth in their values.
Supply and demand
The low level of stock available for sale has been a major contributor to the sharp rise in home values in Sydney and Melbourne. More recently we have seen a lift in new listings as we head into the Spring Selling Season. New listings in Sydney are now 16% higher than a year ago and in Melbourne they are 5.7% higher.
Total listings have also been trending higher with Sydney total listings now 4.7% higher than a year ago and in Melbourne they are -5.4% lower than a year ago. The sharp rise in listings in Sydney is probably one of the contributing factors to the slower rate of value growth because potential buyers now have more choice and less urgency in their decision making.
Across the remaining cities, new listings are higher over the year in Brisbane, Adelaide and Canberra. Total listings are lower in Brisbane, Adelaide, Hobart and Canberra. Encouragingly the markets recording the greatest value falls are seeing less new stock entering the market however, they still see heightened overall stock levels due to sales having become tougher over recent months.
Days on market
Although new listings are rising, sellers in Sydney and Melbourne are still experiencing a rapid rate of sale. The typical Sydney home is selling after just 26 days and the typical Melbourne home sells after just 32 days.
With lots of new homes becoming available for sale it will be interesting to see whether the average days on market figure starts to rise. Across the other capital cities the average days on market is recorded at: 50 days in Brisbane and Adelaide, 67 days in Perth, 65 days in Hobart, 73 days in Darwin and 49 days in Canberra.
For more on the market, take a look at John’s quarterly market outlook.