Prices Up for 3rd Month
In September results, the Australian property market experienced its strongest gains since March 2017, as prices rose for the third consecutive month. While the lift in prices was still somewhat subdued, a pattern is starting to emerge as both first-home buyers and investors re-enter the market. According to the CoreLogic national home value index, five of eight state capitals were up for the month, with the combined capitals and combined regional totals also back in positive territory.
According to the CoreLogic index, both Sydney and Melbourne saw 1.7% growth for September, with Canberra up 1.0%, Brisbane up 0.1%, and Adelaide flat. While home values in Perth, Hobart, and Darwin were all down for the month, the combined capitals index was up 1.1%, and the combined regional total was just above parity at 0.1%. The overall national total was up 0.9% for the month, 1.7% for the quarter, and -3.9% for the year.
Australia's two biggest markets have been ticking over nicely over the last three months, with Sydney recording 3.5% growth for the quarter compared to Melbourne's 3.4%. Other than Perth and Darwin, however, the NSW and Victorian capitals also recorded the worst annual results at -4.8% and -3.9% respectively. The median value of a Sydney home is currently sitting at $805,424, with Melbourne much cheaper at $634,913. To put things into perspective, the median national home is $524,744, and the median regional home is $376,903.
According to CoreLogic's head of research Tim Lawless, the discrepancy between rising monthly and quarterly prices and weak annual growth may indicate good buying conditions: “Although housing values are now consistently tracking higher, at least at a macro level, the national index remains 6.8% below the October 2017 peak, indicating that buyers still have some time to take advantage of improved housing affordability before values return to record highs.”
The rebound we have seen in Sydney and Melbourne over the past three months is due to multiple factors, including record low interest rates, improved access to credit, and competitive economic conditions compared to smaller state capitals and regional areas. According to Mr Lawless, “While all regions are benefiting... demographic conditions in New South Wales and Victoria continue to outperform most areas of the country. Population growth is higher, unemployment is lower and jobs growth is stronger, providing a solid platform for housing demand.”
Large heated markets often start to move first as a new trend takes shape, with smaller markets eventually going along for the ride. While some areas are still a long way from recovery, the rate of decline is reduced as more sub-regions start to turn. For example, while only four out of forty-six sub-markets in capital cities experienced growth on an annual basis in the latest index, thirty-three grew over the quarter. The most expensive suburbs in Sydney and Melbourne are leading the way, with this up trend now impossible to ignore if still somewhat limited in terms of its reach.