Prices in Australian capital cities set new record highs in October

Property prices in key cities in Australia reached new record highs in October, up 7.5% year on year to an average of $585,000, according to the latest index figures.

However the pace of annual growth has slowed with the data from CoreLogic also showing month on month growth of 0.5% and quarterly growth of 2.7% but these headline figures mask state differences.

CoreLogic research director Tim Lawless pointed out that month on month growth is down from 1% in September and 1.1% in August and two state capitals saw prices fall with a decline of 2.4% in Adelaide and 2.1% in Hobart.

Elsewhere month on month price rises were all under 1% apart from Darwin which saw growth of 2.2%. Melbourne and Brisbane and Perth all recorded a month on month rise of 0.8%, while Sydney was up 0.6% and Canberra up 0.4%.

The data shows a turnaround for the market in Perth which has seen prices falling for some time with a month on month rise. But values in the city are still down 1.5% quarter on quarter and 3.7% year on year.

Quarter on quarter prices were also down by 2.8% in Hobart and by 1.3% in Adelaide while year on year prices were also down 3.8% in Darwin. Meanwhile, Sydney leads the annual growth with prices up 10.6% year on year, followed by Melbourne up 9.1% and Canberra 7.9% which also led the quarterly growth with a rise of 5.6%.

‘The strong conditions across the Canberra market are largely related to rising house values, with unit values increasing at less than half the pace of detached housing,’ said Lawless.

He added that detached houses in Sydney with growth of 10.9% are showing only a slightly higher rate of capital gain compared with units which increased by 9.1%, highlighting that a healthier supply and demand dynamic that exists in the city.

‘This also points to higher demand for Sydney units considering how expensive Sydney houses have become. Units generally provide a more affordable option for home ownership and investment for many buyers. In most other markets, detached housing is generally outperforming the unit sector as concerns around the high number of units available for sale in the market dent buyer confidence, coupled with lending policies for unit stock becoming tighter,’ Lawless explained.

The divergence in performance between houses and units is most clearly evident in Melbourne and Brisbane. The annual rate of capital gains in Melbourne remains strong at 9.1%, however there is a substantial difference in growth rates between houses and units, with house values up 9.6% compared with a 5.2% increase in unit values over the past year. But Brisbane’s housing market has shown a larger capital gain spread, with house values up 4.7% compared with a 1.4% fall in unit values over the year.

‘The weaker performance of unit values across the Brisbane market may be partially attributed to supply concerns, as unit supply levels across key regions of Brisbane’s inner city show the potential for a significantly larger relative increase in existing stock levels when compared with Melbourne and Sydney,’ said Lawless.