The CoreLogic Home Value Index recorded a 1.1% rise in dwelling values in August, with six of the eight capital cities recording a lift in dwelling values over the month.
The CoreLogic Hedonic Home Value Index recorded a 1.1% rise across the combined capital cities over the month of August, while the performance of the combined regional areas (based on a one month lag) remained comparatively soft, with dwelling values virtually flat at -0.1% over the month.
The strong combined capital cities headline result masks the underlying movements associated with dwelling values which are trending differently from region-to-region and across the broad property types.
While the annual growth trend is now lower than it was one year ago, the rate of capital gains remain well above other benchmark measures such as inflation, income growth and rents, which is pushing already stretched affordability ratios to new record highs.
The August Home Value Index shows a substantial difference between the performance of house and unit values.
At a combined capital’s level, house values rose by 7.2% over the past twelve months, compared with a 5.5% rise in unit values.
The trend for house value growth outperforming unit values is apparent across most of the capital cities, particularly in Melbourne and Brisbane, where concerns around inner city unit oversupply are mounting.
House values by more than double the rate of units over the past year in each of Melbourne, Brisbane, Adelaide and Canberra.
Looking at housing market performance across the broader value segments over the past 12 months, the most affordable suburbs have recorded the greatest value rises, while the most expensive suburbs have seen a more moderate rate of growth.
Based on the CoreLogic Stratified Hedonic Index, the most affordable quartile of capital city suburbs has recorded a value rise of 10% over the past year, compared to 7.4% growth across the broad middle of the market and a 6.2% gain across the most expensive quartile.
Over the three months to the end of August, CoreLogic estimates there have been 15% fewer settled sales nationally compared with the same period one year prior.
The combined capitals have seen a sharper downturn in the number of home sales, down 17.1%.
The trend of fewer sales coinciding with values pushing higher is likely explained, at least partially, by low stock levels, particularly in Sydney and Melbourne, where listing numbers remain close to record lows.
Other factors that are likely to be contributing to the slowdown in transaction numbers include tighter lending conditions, decreasing levels of affordability which prevent some segments of the market from participating and high transactional costs including stamp duty on purchase.
Furthermore, the heightened level of new unit construction and off-the-plan sales is likely to be accounting for some understating of sales activity.
Given off-the-plan unit sales are not counted until they settle, there will be some upwards revision in transaction numbers as the record number of units under construction, and selling off the plan, move through to settlement.
In summary, Australia’s housing market continues to demonstrate a strong level of resiliency in this record low interest rate environment, despite the many moving parts and somewhat divergent underlying trends.