Property Observer – 5 September, 201
Winter’s property prices gains recorded by the RP Data CoreLogic Home Value Index were the largest rises across capital cities for the period since 2007.
No small feat, with prices now on average 10.9% higher than over the past year, and recording 4.2% growth in the three months to August 2014.
However, this growth has largely been led by Sydney and Melbourne, and it’s unsurprising that talks of a slowdown are now prominent. Over the past year Sydney has seen home value results up 16.2%, and Melbourne up 11.7%. Adelaide was the next strongest performer at a much slower 5.9% pace.
Senior research analyst Cameron Kusher notes that when extending the growth analysis to June 2012, Sydney and Melbourne remain strong at 27.2% and 18.5% growth respectively. However, Darwin and Perth also recorded double-digit figures – at 20% and 15% respectively.
“A longer term and retrospective outlook shows that the strength in the housing market has really been all about Sydney and Melbourne – from the market peak in March 2008, to its low point in December 2008, combined capital city home values fell by 6.1%. From that point, values once again began to increase,” Kusher said.
Since December 2008, the picture becomes even more divided. Sydney home values are up 50.1%, Melbourne home values have also soared by 47.5%. Darwin, Canberra and Perth also recorded fairly strong growth at 29%, 21.5% and 15% respectively. However, Hobart values are 1.4% down, and Brisbane and Adelaide only recorded an uptick of 5.3% and 9.9%.
“In light of the recent value growth it is important to realise that it is really a Sydney and Melbourne story with value growth only moderate elsewhere,” Kusher said.
The suggestion, then, is that Sydney and Melbourne will be the first to slow. But to understand why they may do so it’s recommended that you first look at the reasons for growth.