The latest CoreLogic Hedonic Home Value Index reveals further gains across most capital city housing markets last month, taking the current growth phase into its 52nd month.
Capital city dwelling values continued to show a strong headline rate of growth over the September quarter, with the CoreLogic Hedonic Home Value Index rising 2.9% over the past
The combined capital city index, which is heavily weighted towards the Sydney property market and Melbourne property market, recorded a 1.0% month-on-month gain, taking capital city dwelling values 41.3% higher since the growth cycle commenced in June 2012.
Growth conditions were substantially different from region-to-region.
The top performing market was Melbourne where dwelling values pushed 5.0% higher over the third calendar quarter, due largely to a strong rise in house values (+5.2%) which balanced a softer result for the unit market (+2.9%).
Canberra showed the second highest rate of growth over the quarter with values up 4.5%, followed by Sydney at 3.5%.
In contrast, the weakest housing market over the quarter was Darwin where dwelling values declined by 4.5%, to be 11.1% lower than the most recent 2014 peak in property values and 13.9% lower than the previous 2010 peak in dwelling values.
The combined regional markets of Australia, where the measure of value growth lags by one month, saw house values slip 1.1% lower over the three months to the end of August.
While modest declines were recorded across most of the ‘rest of state’ housing markets, the weakest conditions continue to be experienced in regional Western Australia, where
house values have fallen 12.4% over the past twelve months.
The weak housing market conditions across the regional areas of Western Australia were also highlighted in the recent CoreLogic Pain and Gain report, which showed one third of houses which resold over the June quarter did so at gross loss.
While the headline rate of growth remains positive across most cities, the majority of capital cities have seen their growth trend moderate compared with a year ago.
CoreLogic estimates show settled transaction numbers have levelled over the most recent three months, however, at just under 110,000 settled transactions, sale numbers are down 5.3% compared with the June quarter and are 15.0% lower than the September quarter last year.
At face value, the lower transaction numbers suggest a slowdown in housing demand, however the reasons for fewer dwelling sales are likely to differ from region-to-region.
Another factor affecting transaction counts is the level of undercounting due to the record-high number of off-the-plan sales yet to reach settlement.
As off-the-plan units move through their settlement phase, transaction numbers will revise higher.
Recent data from the NSW Office of State Revenue showed that off-the-plan dwelling sales comprised a record high 17.3% of all residential stamp duty transactions across the state in August 2016.
Considering off-the-plan buyers can pay stamp duty within 12 months of purchase, it’s likely that these sales will comprise an even larger proportion of the market now.
Other factors such as tighter lending conditions, affordability constraints and, potentially some degree of buyer and vendor exhaustion after such a long growth cycle are also contributing to less turnover and fewer new properties being advertised for sale across the market.
Despite the low mortgage rate environment, high transaction costs may also be a disincentive for transacting in the housing market.
Due to bracket creep and higher dwelling values, we’ve also seen stamp duty dollar value payments rise substantially.
In addition, percentage-based expenses such as agency commission fees for vendors have moved higher as the value of housing rises.
It is likely that an increasing number of home owners are weighing up the pros and cons of the costs associated with selling and buying, or, staying where they are.
Clearly, many factors are at play across Australia’s housing market.
In fact, there isn’t just ‘one’ single housing market nationally, there are a multitude where conditions vary substantially by way of geography, housing type, and price point.