Property prices in Australia record slowest quarterly growth since June 2016

Property values edged 0.2% higher across Australia in September, led by a 0.3% rise in capital cities and a 0.1% gain across the combined regional markets, the latest index shows.

The latest figures take national home prices 0.5% higher over the September quarter, which is the slowest rate of quarter on quarter growth since June 2016, and national values are up 8% over the past 12 months.

Month on month prices fell by 0.1% in Sydney but are still 10.5% up compared to September 2016 and fell 0.7% in Darwin where they are 4.7% down year on year, according to the CoreLogic data.

On a monthly basis prices were up by 1.7% in Hobart, 0.9% in Melbourne, 0.6% in Canberra, 0.3% in Brisbane, 0.1% in Perth and unchanged in Adelaide. Year on year they were up 14.3% in Hobart, 12.1% in Melbourne, 7.8% in Canberra, 5% in Adelaide, and 2.9% in Brisbane while falling by 2.9% in Perth.

According to CoreLogic head of research Tim Lawless, the combined capital city trend growth rate is clearly losing steam with dwelling values rising by 0.7% over the September quarter and well down from the recent peak rate of quarter on quarter growth which was recorded at 3.5% over the December 2016 quarter.

‘This slowing in the combined capitals growth trend is heavily influenced by conditions across the Sydney market where capital gains have stalled,’ said Lawless.

He pointed out that in the third quarter prices in Sydney edged 0.2% higher but this was the slowest quarter since values declined by 2.2% in the first quarter of 2016 and it’s the first month on month decline after 17 months of consistent capital gains.

He also pointed out that across the Sydney housing market, it was the detached housing sector that pulled the monthly and quarterly growth rates lower. While unit values are also appreciating at a slower rate, detached housing values were 0.3% lower over the month of September and 0.2% lower over the quarter while unit values recorded a subtle rise.

For the Sydney housing market, concerns around unit oversupply is less evident compared with the Brisbane unit sector, or to a lesser extent with Melbourne. Mr Lawless explained.

‘Potentially the affordability challenges facing Sydney buyers within the detached housing sector are pushing more demand towards the medium to high density sector, where, based on median values, houses are almost $290,000 more expensive than units,’ he added.

Melbourne’s housing market is also showing slower growth conditions, however growth remains relatively resilient compared with Sydney. Dwelling values were almost 1% higher over the month of September and rose by 2.0% over the September quarter.

‘The stronger housing market conditions in Melbourne are supported by auction clearance rates which have consistently remained above 70%. Additionally, advertised stock levels remain remarkably low and private treaty sales continue to sell rapidly, averaging 30 days on market,’ Lawless explained.

Hobart further cemented its position as the best performing housing market after a recent history of sluggish growth conditions. The past 12 months has seen Hobart dwelling values surge 14.3% higher, the highest annual growth rate since 2004.

Despite the strong capital gains, the cost of housing remains substantially lower than any other capital city with a typical house value of $412,340 and a median unit value of just under $320,000.

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