Housing market outlook from March results- Cameron Kusher

It’s been a busy time across the property market with the release of the RP Data Rismark March Home Value results coinciding on Tuesday last week with the RBA’s announcement on interest rates. 

Fortunately, both results delivered good news; an increase in values of 2.3% in March across the combined capital cities and the RBA announcing that interest rates will remain on at 2.5 per cent for its seventh consecutive month.Findings in the March Home Value Index results varied from a 0.6 per cent increase in Perth to a 3.3 per cent increase in Darwin.

  • Over the first quarter of the year, combined capital city home values increased by 3.5 per cent.  Capital city home values rose over the first quarter in every capital city except for Perth where they fell by -0.6 per cent.  The quarterly rate of value growth was particularly strong within Melbourne (5.4%), Hobart (4.7%) and Sydney (4.4%).
  • Combined capital city home values increased by 1.6 per cent over the 12 months to March 2014.  Over the year every capital city recorded an increase in home values however, Sydney and Melbourne have been the primary cities for value growth.
  • Across the remaining cities, value growth has been recorded at: Brisbane (4.8%), Adelaide (4.6%), Perth (4.7%), Hobart (0.9%), Darwin (3.8%) and Canberra (1.7%).  As the data highlights the headline combined capital city result is largely due to strong growth in the two largest cities (Sydney and Melbourne).[sam id=43 codes=’true’]
  • Looking at the performance of houses and units, annual value growth has been stronger for houses (10.7%) compared to units (9.4%).  Houses have recorded a greater annual value increase across all capital cities except for: Perth, Hobart and Canberra.
  • Sales activity increased across the country with both house and unit sales volumes currently above the five year average levels.  Based on estimates by RP Data, over the three months to January 2014 there were 81,879 houses and 29,575 units sold.
  • Sellers are the major benefactors of the current housing conditions; the market is currently experiencing conditions whereby the number of properties available for sale is lower than a year ago (despite the fact new listings are higher), vendor discounting has improved and properties are typically selling in a relatively short period of time.
  • Rental growth across the capital cities is being significantly outpaced by the growth in home values; as a result, rental yields are easing.  Over the 12 months to March 2014, capital city rental rates have increased by 2.3 per cent for houses and 3.2 per cent for units, well below the five year average annual rates of increase of 3.9 per cent for houses and 4.1 per cent for units.

Despite the signs that the housing and construction sector is picking up as mining investment slows, it does not mean that the economic changeover will be without its challenges, as highlighted by the recent Capital Expenditure Survey.

Globally, the US economy appears to be picking up and the Chinese economy appears to be experiencing a soft landing in terms of its moderation in economic growth and even the Eurozone’s prospects appear to be improving.

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Cameron Kusher

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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