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Capital City Properties Grew In Value More Last Year Than In Most Years – Cameron Kusher

The capital city housing market returned above average value growth in 2013. Combined capital city home values increased by 9.8% in 2013 which is above the long-term average growth rate of 7.5%.

According to the RP Data-Rismark Home Value Index, capital city home values increased by 9.8% in 2013.

The Index is available from December 1995 so if we look at the annual value growth over the last 18 years, you can see that the 9.8% annual rise is higher than many other years.

In fact, over the 18 years there have only been 7 years in which the annual rate of capital city home value growth has been stronger than that in 2013.

The annual compound value growth over the past 18 years is 7.5% which also indicates a typically stronger value growth performance last year.

 

RP Data Property Pulse - research article

 

The other interesting point to note is that throughout the past 18 years, there have only been three calendar years in which home values have fallen.

Home values fell by -4.1% in 2008, -3.8% in 2011 and -0.4% in 2012.

The fact that home values rose by 9.8% in 2013 is further exacerbated by the fact that the increase comes off-the-back of consecutive annual value falls which has not occurred in more than 18 years.

Looking at the difference between value growth for houses and units you can see that house values have typically increased at a faster pace than unit values over the past 18 years.

Across 13 of the last 18 years, house values have risen by a greater amount than unit values.

Interestingly, in each of the years where home values have fallen (2008, 2011 and 2012) unit values have recorded a smaller fall than house values or a slight increase in values as they did in 2012.

 

RP Data Property Pulse - research article

 

The previous charts also highlight than the period from 2001 to 2003 was the strongest recent period for value growth.

This is further highlighted when the increase in home values is split into five year increments across the individual capital city markets.

For houses, total value growth was strongest between 1998 and 2003 in Sydney, Melbourne, Brisbane, Adelaide, Hobart and Canberra.

In Perth and Darwin, the period from 2003 to 2008 was the strongest for house value growth.

On the other hand, 2003 to 2008 was the weakest for total value growth in Sydney and Melbourne, in all other capital cities house value growth has been weakest over the most recent five years.

 

RP Data Property Pulse - research article

 

The trends for units are extremely similar to the trends for houses.

Of course it is also noticeable that the total growth for units across individual capital cities is typically much lower than the level of growth for houses.

 

RP Data Property Pulse - research article

 

Overall, the data highlights that the last ten years has been a significantly weaker period for value growth than the preceding period.

Of course, as the values of homes are now higher than in the past, values have to rise by a greater amount to match previous levels of capital gains.

Given this, the level of capital growth over recent years and the greater prevalence of annual value falls are likely to be more reflective of market conditions over coming years rather than the levels of value growth seen back in the period between 2001 and 2003.

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About

Cameron Kusher is Corelogic RP Data’s senior research analyst. Cameron has a thorough understanding of the fundamentals such as demographics, trends & economics. Visit www.corelogic.com.au


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