According to the November CoreLogic RP Data Home Value Index, dwelling values across Australia’s capital cities fell by -0.3 per cent over the month.
The data highlights that the rate of home values growth continued to slow across the capital cities.
Over the month, home values rose in Sydney (+1.0%), Brisbane (+0.4%), Perth (+0.9%) and Hobart (+0.2%) while values fell across the remaining capital cities.
CoreLogic RP Data research analyst Cameron Kusher said this recent slowdown in the rate of capital growth is further highlighted by the fact that over the three months to November 2014, values rose by just 0.8 per cent across the combined capitals.
Over the three months, values increased in Sydney, Brisbane and Perth but fell across all other capital cities.
Mr Kusher said the slowdown in capital growth is further evident when we take annual growth rates into account.
“Although combined capital city home values increased by a healthy 8.5 per cent over the 12 months to November 2014, the annual growth rate is now at its lowest level in the year – the rate of annual home value growth across the combined capital cities continued to slow after peaking at 11.5 per cent over the 12 months to April 2014,” he said.
Excluding Hobart, across each capital city the annual rate of capital growth is now lower than its recent peak. Mr Kusher said this suggests that most cities have now moved past their cyclical peak.
“Importantly, this has become apparent in the two largest capital cities; Sydney and Melbourne, where annual value growth peaked at 16.7 per cent in April 2014 and at 11.9 per cent in January 2014 respectively.”
“Although Sydney and Melbourne appear to have moved through their peaks, capital growth these two cities have consistently been the main driver of value growth over the past 12 months.”
Over the past year, Sydney home values increased by 13.2 per cent and Melbourne home values rose by 8.3 per cent.
Sydney has seen much stronger growth over the year than Melbourne however, Melbourne’s growth remains quite higher than the third strongest performing city for capital growth, Brisbane.
Brisbane home values increased by 6.0 per cent over the past year while Hobart (+5.2%) is the only other capital city to record annual value growth in excess of five per cent.
“Market indicators such as auction clearance rates remain quite strong, but also point to slightly weaker overall housing market conditions,” Mr Kusher said.
Auction clearance rates reduced noticeably across the two largest auction markets, Sydney and Melbourne, over recent weeks while clearance rates were typically recorded at around the high 70 per cent and mid 70 per cent mark respectively at the start of Spring.
Clearance rates are now sitting at a low 70 per cent in Sydney, and mid 60 per cent in Melbourne.
Rolling annual change in capital city dwelling values
The number of new properties listed for sale across the combined capital cities continues to trend higher.
Although this occurred throughout the last two months, Mr Kusher said it wasn’t until recently that the total number of property listings also started to trend higher.
“This may indicate a slower rate of sale and is indicative of mounting stock on the market.”
“Although the annual growth rate in rentals remains at decade lows, recent weaker capital growth conditions have seen rental yields pushed slightly higher. Based on slow value growth rates, a significant response to market supply over the past two years is likely to result in fairly sluggish levels of rental growth over the coming year.”
“With just one month left in 2014 it is looking as if this year will see a lower level of capital growth than last year.”
SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
PREFER TO SUBSCRIBE VIA EMAIL?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.