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Houses in capital cities reach record high in value for July
Monday, 1 Aug 2016 08:49:42 | Thuy Ong
Home values in Sydney jumped 5.6 per cent with a median price of $775,000. (AAP: Dean Lewins)
New figures show values of capital city homes reached a record high in July, with the rate of growth slipping back, but still tracking faster than income growth.
The CoreLogic Home Value Index reported a 0.8 per cent rise over the month, taking capital city dwelling values 6.3 per cent higher over the first seven months of the year.
The best performing city was Sydney, with values jumping 5.6 per cent in the quarter. It remains the most expensive city, with a median dwelling price of $775,000.
The weakest performing city was Darwin, which slumped 7 per cent but, despite that, Darwin houses still had the highest gross rental yield of 5.3 per cent.
'Deterioration of housing affordability'
Capital city dwelling values have jumped by 38.3 per cent since the capitals' growth cycle began in June 2012.
"The growth trend rate is still tracking considerably faster than income growth, resulting in a deterioration of housing affordability," observed Asia-Pacific research director at CoreLogic, Tim Lawless, in the report.
Mr Lawless cited Australian National University, which estimates Sydney household incomes have grown 4.5 per cent per annum since June 2012, compared to dwelling values, which have jumped 12.1 per cent per annum.
"The erosion in housing affordability is likely to be one factor working to slow housing demand across price sensitive market segments," Mr Lawless said.
"We're also seeing first home buyers are at lower levels across most states, in particular at record low levels of participation across Sydney."
Meanwhile, CoreLogic flagged a recent fall in weekly rents had pushed capital city rental yields to a historic low of 3.3 per cent, with Melbourne posting the lowest gross yield for houses of 2.8 per cent, while Sydney had the lowest yield for units, at 3.9 per cent.
The Reserve Bank of Australia will meet on Tuesday, as last week's much anticipated inflation figures failed to deliver the expected decisive case for another rate cut.
"Policy makers will be wary of lower interest rates creating renewed upwards pressure on housing markets," Mr Lawless said.
"The strong clearance rates, as well as the fact that dwelling values are continuing to move higher may make the RBA's decision to cut rates more difficult, despite the low inflation trend and high dollar."
Markets are pricing in a 64 per cent chance of a rate cut to 1.5 per cent.
CoreLogic July Home Value Index
| Region | Change in dwelling values | Total gross returns | Median dwelling price | ||
|---|---|---|---|---|---|
| Month | Quarter | YoY | |||
| Sydney | 1.3% | 5.6% | 9.1% | 12.7% | $775,000 |
| Melbourne | 1.1% | 3.5% | 7.5% | 10.8% | $585,000 |
| Brisbane | -0.8% | -0.9% | 3.9% | 8.6% | $477,500 |
| Adelaide | 1.4% | 0.2% | 4.8% | 9.2% | $417,500 |
| Perth | -0.9% | -4.3% | -5.6% | -1.9% | $490,000 |
| Hobart | 1.1% | 5.2% | 6.2% | 11.9% | $327,800 |
| Darwin | -6.2% | -7.0% | -7.6% | -2.6% | $497,500 |
| Canberra | -0.7% | 0.7% | 2.9% | 7.2% | $561,000 |
| Combined capitals | 0.8% | 2.9% | 6.1% | 9.9% | $570,000 |
| Rest of State | -0.6% | -1.2% | 1.4% | $365,000 | |
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