Capital Cities Lead the Property Charge
Australian property prices continue to rise, with values up 7% in the three months to May. This represents the sharpest quarterly increase since November 1988, as investors return to the market in droves. While regional markets have surged all year, and prices were high across the nation, state capitals achieved renewed momentum as buyers regain confidence in Australia's biggest cities.
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According to the latest data from CoreLogic, regional property values have set the tone in Australia over the last 12 months. Growth was up 15.2% for the year in regional areas compared to just 9.4% in the capitals. However, while there is still a lot of interest in the regions, the traditional capital-driven narrative is starting to return in 2021. According to CoreLogic head of research Eliza Owen, “buyers are getting more bullish about capital cities again.”
Sydney home values experienced the most growth over the quarter at 9.3%, followed by Darwin with 7.9% growth, Hobart with 7.7% growth, and the ACT with 6.5% growth. Property growth was up 6.2% in Brisbane for the quarter, followed by Melbourne with 5.5%, Adelaide with 5.4%, and Perth with 3.8%. Despite significant growth in regional areas in the latter half of 2020, state capitals grew faster than their regional cousins over the quarter - with one notable exception.
Melbourne was the only city to record less growth than state regions over the quarter, at 5.5% growth compared to 6.2%. The Victorian capital was hit hard by COVID lockdowns in 2020, and its only just emerging from its fourth lockdown. The overall trend is clear, however, with money pouring back into Australia's largest cities as optimism returns to key growth markets.
According to Eliza Owen, “I think cities are becoming more revitalised again. In Sydney, for example, we have seen a resurgence in business activity and people returning to the CBD and so there’s probably less incentive to leave cities as a result, apart from Melbourne that has found itself in lockdown again.” It seems that growth conditions are far from equal, both within states and within capital cities themselves.
The high end of the housing market is responsible for most of the current movement, with the lower end of the market likely to catch-up later in 2021 if the trend continues. Based on CoreLogic figures, the highest 25% of housing stock in Sydney climbed 12% over the quarter, compared to just 5.2% growth for the bottom 25% of the market. This situation was common across the country, with Melbourne values recorded at 6.5% and 3.5% at the top and bottom ends of town, and Brisbane recording 7.5% growth compared to 3.5%.