The CoreLogic October Home Value Index results show that capital city dwelling values have reached new record highs for the month, with values rising across six of the eight capitals.
According to CoreLogic research, capital gains remained positive across Australia’s combined capital city housing markets, however, the pace of growth has reduced when compared with previous months, with October dwelling values rising by 0.5%, compared with a 1.0% lift in September and 1.1% rise in August.
The latest monthly housing market data takes the quarterly change in capital city dwelling values to 2.7% and 7.5% higher over the past twelve months.
The strong conditions across the Canberra market are largely related to rising house values, with unit values increasing at less than half the pace of detached housing.
The Sydney property market continued as the stand out based on annual capital gains, recording the largest year-on-year increase; dwelling values are now 10.6% higher over the past 12 months.
In most other markets, detached housing is generally outperforming the unit sector as concerns around the high number of units available for sale in the market dent buyer confidence, coupled with lending policies for unit stock becoming tighter.
The divergence in performance between houses and units is most clearly evident in Melbourne and Brisbane.
The annual rate of capital gains in the Melbourne property market remains strong at 9.1%, however there is a substantial difference in growth rates between houses and units, with house values up 9.6% compared with a 5.2% increase in unit values over the past year.
Brisbane’s housing market has shown a larger capital gain spread, with house values up 4.7% compared with a 1.4% fall in unit values over the year.
According to CoreLogic, another sign of market strength can be seen in auction results.
Auction clearance rates, which are one of the most timely measures of the fit between buyer and seller expectations, have been tracking in the mid to high 70% range across the combined capital city markets, with the largest auction markets of Melbourne and Sydney general showing a higher rate of clearance.
In fact, over the past two months, clearance rates across Sydney have dipped below 80% only once.
A year ago auction clearance rates were consistently trending around the mid 60% range, albeit on volumes that were about 20% higher.
The strong housing market growth results are continuing to occur on a back drop of low stock levels and low transactional activity.
The latest national listing estimates from CoreLogic show total listing numbers remain 2.6% lower than a year ago, with the most substantial drop in listing numbers over the year recorded in Hobart, where there are almost one third fewer homes listed for sale.
Canberra stock levels are 15% lower than a year ago and listing numbers in Sydney remain subdued, tracking 9.6% lower than last year.
Low stock levels tend to create a higher level of urgency in the housing market as buyers compete with each other and vendors are less willing to negotiate on prices.
While home values are still rising, the rate of growth is slower than it was 12 months ago, however, annual growth remains somewhat heightened, particularly considering this growth phase has now been running for almost four and a half years.
With ongoing strong value growth and high clearance rates in Sydney and Melbourne, as well debate around affordability gathering some momentum, there is likely to be further caution by the Reserve Bank around future interest rate cuts, which, if it were to occur, may provide additional stimulus for housing markets around Australia.