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New CoreLogic figures reveal home values have continued to rise and investors are back in the market

8 Nov 2016 Padstow 0 Comment

PROPERTY values rose in six capital cities during October, but took a tumble in some of the smaller markets.

Darwin was the standout performer during the month with values up 2.2 per cent according to the latest CoreLogic Home Value Index.

Sydney, Melbourne, Brisbane, Perth, and Canberra values all increased by less than one per cent.

While those capital cities enjoyed marginal increases, the Adelaide and Hobart values took a decent blow.

Adelaide values were down 2.4 per cent for the month and Hobart down 2.1 per cent.

CoreLogic research director Tim Lawless said both were smaller markets which could be volatile but he was surprised at the level of the drops.

“I am surprised at the quite sharp downwards result for Adelaide, (which was) down 2.4 per cent for the month both in houses and units,’’ Mr Lawless said.

“It does come on the back of what had been previously a reasonably consistently strong conditions. We might just be seeing a bit of volatility in the reading in Adelaide other indicators in this market are generally quite strong. We have actually seen volumes rising across the city, its rental yields are higher than the other capital cities, the major capital cities anyway, and we are seeing resilience in this market place despite a lot of uncertainty in the local economy.

Mr Lawless said Hobart had a broader trend of strong growth and he thought this month’s result was temporary.

“I think what we are seeing in Hobart over the month is probably a temporary blip and we will continue to see a growth trend in this marketplace,’’ he said.

Nationally values rose across capital cities by 0.5 per cent during October bringing the year on year increase to 7.5 per cent.

While the rate of growth has slowed Mr Lawless tipped it would continue to stay in positive territory nationally.

Mr Lawless said low mortgage rates contributed to that as well as increased investment demand.

He said investors were back in the market with Australian Bureau of Statistics data revelling

they now accounted for nearly 50 per cent of all new mortgage demand.

“So we are seeing investors once again playing a very active role in the market after they did fall away post changes from APRA back in 2014 and 2015.’’

The figures revealed growth in Sydney slowed during the month and was just 2.9 per cent for the quarter.

“2.9 per cent is certainly lower than what Sydney was experiencing the previous part of 2016 and potentially does reflect that this marketplace is starting to move through the peak of its cycle,’’ he said.

Melbourne experienced an uplift of 4.6 per cent for the quarter.

Mr Lawless said this was driven in part by the absence of some of the same affordability constraints that were present in markets like Sydney.

“In fact there is about a $200,000 difference in the median dwelling price across the two cities despite very little in the way of income differences between Sydney and Melbourne, so I don’t think we have seen same barriers from affordability constraints in Melbourne as we do in parts of Sydney, but in the same sense we are seeing real divergence between the performance of houses versus apartments.’’

Brisbane’s growth was weaker than Sydney and Melbourne with values up just 1.3 per cent for the quarter.

“I still think Brisbane does have some brighter prospects when you look at some of the macro economic trends in Queensland we seeing an improvement migration trends now, the local economy is starting to pick up a little bit and the big gap in prices between the three largest cities, it really does place Brisbane in quite a competitive position to attract more buyers.’’

Perth had positive growth of 0.8 per cent for the month, but Mr Lawless said it was not a sign the marketplace was starting to level out.

Darwin has recorded some positive growth with values up 2.2 per cent for the month and 4 per cent for the quarter.

“We have seen some surprisingly positive indicators in the Darwin marketplace, not just our index readings, which are now showing a 4 per quarter on quarter rise but also in transactional numbers we have been seeing four months now where transactions have risen, still off a very low base, but potentially we are expecting to see some buying demand come back into the Darwin marketplace.’’

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