The latest heart RPData figures showed how wrong the property pessimists got it last year – dwelling values across Australia’s capital cities increased by 1.4% in December and by 2.8% over the final quarter of 2013.
Today’s figures show that across the combined capital cities home values increased by 9.8 per cent over the 2013 calendar year.
According to RP Data’s Cameron Kusher, this was the fastest annual rate of value growth since August 2010, and the largest calendar year increase in values since 2009 when home values were up by 13.7 per cent.
It got better as the year went on.
Breaking the year down into halves, the first six months of the year saw home values increase by 3.0 per cent compared to a 6.6 per cent increase over the second six months. Mr Kusher said:
“Clearly value growth has gathered momentum throughout the second half of the year.
Despite the strongest annual value growth since 2009, the rate of growth was not that startling given the low interest rate environment and the previous successive years in which home values fell.
Although home values increased by 9.8 per cent in 2013 the growth follows a -3.8 per cent annual fall in values in 2011 and a further -0.4 per cent annual fall in 2012. Cumulatively, from peak to trough, capital city dwelling values were down 7.7% prior to this current growth cycle,”
Despite this growth, we’re not in “boom” times.
Based on these latest results, it should be noted that between 1996 and 2013, there were seven instances where the calendar year rate of capital gain was greater than value growth over the past 12 months.
According to Mr Kusher, this indicates that although value growth has been strong compared to recent years, the current growth cycle has been somewhat muted.
Each capital city housing market recorded positive home value growth in 2013, however, the cities driving the capital growth have been the Sydney property market (14.5%), Perth (9.9%) and Melbourne properties (8.5%).
The Brisbane property market was the only other city to record value growth in excess of 5 per cent (5.1%) with each of the remaining capital cities recording annual value growth of 3.5 per cent or less.
An increase in dwelling values across each city over the past year has seen values move closer to their previous peaks where
Sydney and Perth remain the only cities where home values are currently at record highs, up 10.9 per cent and 3.6 per cent over prior cycle peaks, respectively.
Across the remaining capital cities values are all lower than their record highs; Melbourne (-0.7%), Canberra (-0.8%), Adelaide (-2.4%), Brisbane (-6.6%), Darwin (-7.7%) and Hobart (-12.0%).
Mr Kusher said that it is clear that as the market enters 2014 and as values rise across each capital city, the rate of growth will vary greatly.
He said that the main challenges in 2014 are likely to be the impact of a forecasted higher unemployment rate, affordability constraints for the more price sensitive sectors of the market (particularly in Sydney, Melbourne and Perth) and whether any regulatory changes will be implemented by APRA and the RBA to cool the near-record high levels of investment activity.
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