The CoreLogic RP Data hedonic Home Value Index showed dwelling values moved 0.8% higher in April across the combined capital cities with values rising across all capital cities except Canberra.
The April Home Value Index results have confirmed that values across Australia’s combined capital cities increased by 0.8 per cent in April 2015, down from a 1.4 per cent month on month increase in March.
Overall dwelling values shifted higher over the past month across every capital city except Canberra where values showed a 1.5 per cent drop over the month.
Despite the slower month on month reading, the annual rate of growth has seen a slight rebound, with dwelling values now 7.9 per cent higher over the past twelve months across the combined capital city index.
Annually, the rate of capital gain has slowed since April last year, however, since the February rate cut the Sydney and, to a lesser extent, Melbourne housing markets have caught a second wind which is reflected in the higher rate of capital gain as well as the very strong auction results and rapid rate of sale for properties sold via private treaty.
Capital Gains results
Despite the slight annual rate of growth upswing, capital gains remain lower than their annual peak recorded in April last year when dwelling values were rising at the rate of 11.5 per cent per annum across the combined capitals index.According to the April Home Value results, capital city dwelling values have been trending higher over the past 35 months, recording a cumulative increase of 25.3 per cent between the end of May 2012 and April 2015.
While the combined capitals trend of dwelling value growth has been substantial, the rate of growth across the Sydney housing market stands head and shoulders above the other capital cities over the cycle to date.
Sydney dwelling values are now 40.2 per cent higher relative to the May 2012 trough.
If you factor in the previous 2009/10 phase of growth, Sydney values are now up 65.4 per cent post GFC.
Melbourne is the only other capital city that comes close to this measure where dwelling values are 52.3 per cent higher post GFC.
The next highest rate of growth is Darwin where values have moved 26.5 per cent higher, followed by Canberra (19.8%), Perth (15.2%), Adelaide (12.2%), Brisbane (8.0%) and Hobart (1.2%).
While the headline growth figures remain strong it is clear that some markets are winding down.
The rate of growth in Perth and Darwin has slowed substantially in line with the wind down of major infrastructure projects associated with the resources sector and the housing market in Canberra has also softened post federal election.
The performance of houses versus apartments has shown some interesting trends of late. Detached homes are continuing to outperform the multi-unit sector, with capital city house values up 8.3 per cent over the past year while unit values have risen by a lower 5.6 per cent.
This trend is more noticeable in the key growth markets of Sydney and Melbourne.
Sydney house values are up 15.5 per cent over the past year while unit values have risen by 9.7 per cent.
The over-performance of houses compared with units is more apparent in Melbourne where house values are 7.6 per cent higher over the year compared with a growth rate of just 1.9 per cent across the unit market.
A similar trend is evident across most of the capital cities and can likely be attributed to the higher supply levels in the apartment markets which are keeping a lid on the rate of capital gain.
Rental markets haven’t seen much improvement from their sluggish pace of growth.
Over the past twelve months weekly rents have increased by 1.7 per cent across the capital cities, with weekly rents falling in Perth, Canberra and Darwin over the past year.
The highest rental growth can be found in Sydney, where weekly rents are 3.3 per cent higher over the year.
According to the results, virtually every capital city is seeing rental rates rising at a substantially slower pace than dwelling values which is causing severe yield compression in some cities.
The low yield scenario is most evident in Melbourne where the typical house is attracting a gross yield of just 3.2 per cent.
Sydney isn’t far behind with the average gross yield on a house now 3.4 per cent.
Darwin remains the highest yielding city, with an average gross yield of 5.7 per cent for local houses, while Hobart yields have actually improved to be the second highest of any capital city at 5.3 per cent gross.
Most other housing market indicators remain strong
Auction clearance rates have surged to new record highs after the February rate cut and have trended slightly higher over the final two weeks of April.
Additionally, the number of homes being advertised for sale has been trending lower, particularly in Sydney where listing numbers are now lower than the number of properties being advertised for sale in Melbourne, Brisbane and Perth.
The short supply of advertised homes in Sydney is likely to be one of the key factors driving local dwelling values higher, with buyers pressured to make a purchase decision quickly with minimal negotiation on asking prices due to few alternative housing options available for sale.
The performance of the housing market is increasingly varied across the capital cities.
Sydney is continuing to dominate the headlines with such a high rate of capital gain, while Melbourne is also showing a solid performance.
At the other end of the spectrum, Perth, Darwin, Hobart and Canberra are showing weaker results while Brisbane and Adelaide and are roughly keeping pace with inflation.
In fact, outside of Sydney and Melbourne, the next highest rate of annual capital gain can be found in Brisbane where dwelling values are up a comparatively paltry 2.2 per cent.