Housing total returns slump over the 2018-19 financial year

A combination of housing values trending lower and sluggish rental conditions.

CoreLogic research looks at the total investment return trends across Australia’s capital cities and broad regional markets.Close Up Of Business Graph

Derived from the CoreLogic hedonic accumulation index, this analysis provides a summary of the total returns (value growth and gross rental returns) for residential properties.

The data is available from the 2005-06 financial year onwards.

Over the 2018-19 financial year, total returns from residential property recorded a fall of -3.3%.

Annual Total Returns

Returns were down from the previous year and it was the only financial year since at least 2005/06 that total residential property returns were negative.

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To put that in context, housing returns last year were worse than those recorded during the financial crisis and during the 2010-12 housing downturn.

The combination of falling values and historically low rental yields have driven total returns into negative territory.

Looking at the national figures in the context of the combined capital cities and combined regional markets shows that returns have reduced over the year across both regions.

Annual Total Returns Cities

Annual Total Returns Regional

However, combined capital city returns have fallen -4.5% while combined regional market returns remained mildly positive at 1.6%.

For the combined capital cities it was the weakest returns on record and the first negative annual return, while across the combined regional markets it was the weakest annual return since 2008-09.

Across NSW, total returns fell over the 2018-19 financial year in both Sydney and regional NSW.

Annual Total Returns Sydney

For Sydney, it was the second consecutive financial year in which returns have fallen however, it was a larger -6.7% fall compared to the previous year and the largest fall of any time since 2005-06.

Annual Total Returns Nsw

In regional NSW total returns were – 0.5% lower over the past financial year and it was the first time over the period that total returns recorded a decline.

In Vic total returns were lower over the most recent financial year in both Melbourne (-6.0%) and regional Vic (4.5%).

Annual Total Returns Melbourne

Annual Total Returns Vic

For Melbourne it was the first financial year in which returns were negative since 2011-12 and it was the largest fall in total returns on record.

Although regional Vic total returns remained positive, the market experienced a substantial slowing from the previous year.

Furthermore, it was the slowest growth in total returns for regional Vic since 2011-12 when they increased by 3.5%.

Although total returns throughout the 2018-19 financial year remained positive in Brisbane and regional, Qld there was a substantial reduction in returns across both regions.

Annual Total Returns Qld

Annual Total Returns Brisbane

Over the year, total returns in Brisbane were recorded at 1.7% the lowest they have been since the 2011-12 financial year and it was the same story in regional Qld with the 3.2% return the lowest since 2011-12.

Although returns from residential property remained positive over the 2018-19 financial year in SA, both Adelaide and regional SA recorded a slowing of total returns.

Over the year, Adelaide’s total return was 4.1%, which was the smallest return since 2011-12, and down from 6.1% the previous year.

Annual Total Returns Adelaide

In regional SA, returns slipped from 5.2% the previous year to 4.0%, which was the smallest returns since 2011-12.

Annual Total Returns Sa

Total returns were negative in 2018-19 across WA with both Perth and regional WA recording their largest annual falls in returns on record.

Over the year, total returns in Perth recorded a fall of -5.3% and although returns have fallen over three previous financial years, it was the largest decline on record.

Annual Total Returns Perth

In regional WA, returns declined -5.0%, which was also a larger fall than over any of the three previous financial years in which returns were negative.

Annual Total Returns Wa

Both Hobart and regional Tas maintained positive total returns over the 2018-19 financial year however, it was a significant reduction of returns in Hobart.

Hobart’s return was recorded at 8.1% over the year, down from 17.4% the previous year and its smallest annual return since 2014-15.

Annual Total Returns Hobart

In regional TAS the total returns was 11.4%, which was slightly lower than the 13.2% the previous financial year however, returns remained higher than the 10.2% over the 2016-17 financial year.

Annual Total Returns Tast

Total returns from residential property have softened over the past year across NT.

Darwin recorded a decline in total return of -3.0% over 2018-19 which was a larger fall over the previous year but not quite as large as the -3.6% fall in 2015-16.

Annual Total Returns Darwin

In regional NT, total returns were recorded at 7.8% in 2018-19, down from 8.5% over the previous financial year.

Annual Total Returns Nt

Canberra recorded total returns of 6.0% over the most recent financial year.

Annual Total Returns Canberra

The total return in Canberra has fallen over the year from 9.4% and the 6.0% return is the lowest since 2013-14.Outer Eastern Melbourne Market

Canberra, along with Adelaide and Hobart are the only capital cities in which total returns have not been negative over any of the financial years shown.

With early signs that the rate of decline in housing values has slowed in Sydney and Melbourne and rental yields rising across most regions of the country, the outlook for total returns over the coming year looks a little stronger at a national level.

As always, there will be diversity with most regions of the country outside of Sydney and Melbourne yet to show signs of an improving housing market.

We may see an improvement in returns in the two largest capital city housing markets while returns continue to weaken elsewhere.

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Cameron Kusher


Cameron Kusher is Corelogic RP Data’s senior research analyst. Cameron has a thorough understanding of the fundamentals such as demographics, trends & economics. Visit www.corelogic.com.au

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