The findings of the CoreLogic August home value index showed that national housing prices rose by 0.8% over the month, the first monthly boost in prices since October 2017 and the biggest monthly boost since April 2017. Very strong home price gains in Sydney and Melbourne last month, with housing values, accelerated in August 2019 as national dwelling values increasing by 0.8% over the month are driving national average dwelling values higher. Analysts caution August’s sharp bump is not necessarily the beginning of a fresh boom. A recent development is a continuation of the year-round trend in which value declines have been losing momentum continuously and have now begun to increase.
“The significant lift in values over the month aligns with a consistent increase in auction clearance rates and a deeper pool of buyers at a time when the volume of stock advertised for sale remains low. “It’s likely that buyer demand & confidence is responding to the positive effect of a stable federal government, as well as lower interest rates, tax cuts and a subtle easing in credit policy.” According to CoreLogic research director Tim Lawless.
The general outcome was also driven by Melbourne’s 1.4 percent monthly rise, while Australia’s two largest housing markets also had the largest annual rises, just below 2 percent. Housing values have risen over the month through five of the eight capitals, but in Adelaide, Perth, and Darwin slid lower. Only Vic, Tas and NT reported monthly rises across the rest of the state areas.
It was Sydney, Melbourne and Hobart’s third consecutive month of capital gain and Brisbane’s second consecutive month of rises. “While the ‘recovery trend’ is still early, it does appear that growth trends are gathering some pace, particularly in the largest capital cities.” “Although the recovery trend in these two cities continues to strengthen, the expectation is that it will take some time for values to return to their previous highs,” stated Mr. Lawless.
The weakest market conditions continue to emanate from Perth and Darwin, where values dipped further over the month, although the three-month trend in both cities is suggesting an improvement in the rate of decline. Darwin’s values are now 30.7% below their May ’14 peak and Perth values are 20.6% down from the June ’14 peak.
The weakest market conditions continue to emanate from Perth and Darwin, where values fell further over the month, although the three-month trend in both cities suggests a decline rate. Darwin’s values are now 30.7% below their peak of May ‘ 14 and Perth values are 20.6% below the peak of June ‘ 14.
Sub-regions of the capital cities: 26 of the 46 sub-regions of the capital city SA4 reported a rise in residential values over the three months to August 2019. The Central Coast in Sydney has been the only region that has not seen value increases over the previous three months. In Melbourne, in the three months ending August 2019, each sub-region of the town has seen a rise in values.
It was a distinct story on an annual basis, with only four of the areas over the previous year avoiding falls. Sydney, Melbourne, Perth, and Darwin are the 10 regions with the greatest decline.
However, values have risen in 11 of the 43 sub-regions and stay unchanged across two sub-regions, the last three months have seen continuing decreases in regional dwelling values. The Capital Region, Newcastle, and Lake Macquarie and Richmond-Tweed in NSW, Wide Bay, Mackay-Isaac-Whitsunday and Townsville in Qld are areas where values have risen over the quarter across Australia.
Mr. Lawless said, “Evidence of growth returning to areas such as Newcastle, Lake Macquarie and Geelong may well be a hint that the value growth occurring in Sydney and Melbourne is already beginning spillover into nearby regions. Looking at these results annually rather than quarterly shows much stronger growth trends.”
According to the annual change, 17 of the 43 of noncapital city sub-regions have recorded value growth. Three of the sub-regions with the strongest annual growth are in Tasmania, while regional areas of Queensland have also emerged on the list over recent months. The largest declines over the year continue to be centered in areas adjoining Sydney and within agricultural areas of regional Australia.
Mr. Lawless said the two biggest cities would be most vulnerable to any renewed mortgage lending crackdown, given that the ratio of house prices to household income is still around 8.5 in Sydney and 7.5 in Melbourne.
“Affordability constraints will probably continue to worsen from here if we do see housing prices continuing to rise, particularly against a backdrop of very soft wage growth,” he said.
“Particularly if we do start to see lenders becoming more focused on factors such as minimising exposure to high debt-to-income ratios, you’d have to expect that would impact on the very expensive markets, like Sydney and Melbourne, more so than the more affordable markets.”
