After a period of fast paced growth in a number of our cities, things are starting to change. Find out what’s really happening to property values in Australia’s cities.
October 2017’s property market data has revealed a new trend – the rate of growth in property values is slowing. According to the CoreLogic Home Value Index, values were unchanged nationally which is the weakest monthly change in property values since June 2016.
Looking at the combined capital cities and the combined regional markets, no change in property values was recorded in October. In our cities, property value falls were recorded in Sydney (-0.5%), Darwin (-1.6%) and Canberra (-0.1%), values were unchanged in Adelaide and Perth while gains were recorded elsewhere.
In the last three months to October 2017, national property values increased overall by 0.3% with combined capital city values 0.4% higher and regional values falling by -0.1%. Falls were recorded in Sydney (-0.6%), Perth (-0.7%) and Darwin (-4.4%), with increases recorded in Melbourne (+1.9%), Brisbane (+0.6%), Adelaide (+0.1%), Hobart (+3.3%) and Canberra (+1.1%).
Here is CoreLogic’s analysis on the drivers for property value falls and rises by city.
Sydney’s property market
The -0.6% quarterly fall in Sydney’s property values is the highest since March 2016. Sydney’s housing market is clearly slowing on the back of heightened stock available for sale, stretched affordability, increasing number of residents moving interstate and a pull-back in investor housing demand (investors have been the greatest source of housing demand in Sydney over recent years).
Melbourne’s property market
Value growth in Melbourne has also slowed, however more moderately than in Sydney. This is likely due to a number of factors including the cost of housing still being much lower than in Sydney, interstate migration to Victoria is the strongest in the nation, investor demand has been strong over recent years but nowhere near as strong as in Sydney, and Melbourne hasn’t recorded a spike in the volume of stock for sale like Sydney has.
Brisbane’s property market
Brisbane has continued to see quite modest growth however, with migration lifting into south-east Queensland this may lead to a rise in the rate of value growth over the coming year. Economic performance and job creation will be an important ingredient to any acceleration of value growth.
Adelaide’s property market
Adelaide has also continued to see quite moderate to flat growth. Over the 12 months to October 2017, Adelaide recorded growth of 4.6%, so there has been a noticeable slowdown over recent months. The most affordable end of Adelaide’s property market has recorded the lowest value changes over the year, while the middle section of the housing market has been the strongest for growth.
Perth’s property market
Perth has continued to see values fall over the year, however it looks as if it’s closer to a market bottom than Darwin. Sales volumes have increased and values haven’t declined in Perth over the past two months, which is promising to see especially given it has stock levels which remain well above average.
Darwin’s property market
Darwin is also continuing to see property value falls and it’s unclear how close to a market bottom it is. Both advertised stock and sales volumes continue to fall. The best performing segment of the market has been the most affordable properties while the most expensive properties have been weakest for growth over the year.
Hobart’s property market
Hobart is now the strongest performing capital city housing market in the nation. Increasing migration to Tasmania, affordable housing and an improving economy along with very limited supply of stock for sale are key drivers of the acceleration in value growth over the past year.
Canberra’s property market
Canberra property values are increasing at a faster annual pace than they were a year ago however, over recent months the rate of growth has slowed. This is most likely linked to the fact that the volume of housing stock available for sale across the city is now substantially higher than it was 12 months ago.
While the winding-down of growth is likely to be welcomed by federal policy makers and regulators like the RBA, they will probably be monitoring market conditions closely, aiming for a controlled slowdown in conditions rather than a swift decline in values which could disrupt broader economic conditions.
Your Aussie Broker can give you a CoreLogic property market report for your suburb during a free appointment.