Results of the CoreLogic RP Data Home Value Index for December 2014 saw combined Australian capital city home values rise by 0.9 percent over the month to take the annual increase to 7.9 percent.
The Index showed that dwelling values across combined capital cities increased by 0.9 percent in December 2014. Throughout the month home values rose in all cities except for Darwin (-0.6 percent) and Canberra (-0.6 percent) while values were unchanged in Sydney.
During the final quarter of 2014, capital city home values increased by 1.6 percent, with Perth (+2.8 percent), Sydney (+2.3 percent) and Brisbane (+1.8 percent) recording the greatest quarterly gains, while values fell in Darwin (-1.7 percent) and Canberra (-3.4 percent).
Despite the positive result across most cities, the annual rate of capital gain across Australia’s capital city housing market has continued to slow.
The capital gain on houses compared to units was higher, with house values gaining 8.4 percent over the calendar year compared with a 5.1 percent increase in unit values
“Based on the median price across the combined capital cities, houses are attracting a $100,000 premium over apartments, the report also noted.
“The slowing annual growth rate is further evidence that the housing market is losing some steam with combined capital city home values increasing by 9.8 percent over the 2013 calendar year compared to a more moderate 7.9 percent increase in 2014.”
Based on the December results, the annual rate of capital growth has continued its moderation which has been ongoing since April 2014.
CoreLogic RP Data expects dwelling values will continue to appreciate in 2015, at least across the combined capital cities. However, the rate of capital gain is likely to continue to slow over the coming months.
“Affordability hurdles in Sydney, and to a lesser extent in Melbourne, are making it increasingly difficult for some buyers to enter the market. Additionally, low rental yields and the likelihood of tougher lending criteria to investment buyers will likely dampen the very active investor segment of the market which may in turn reduce housing demand in 2015.
“Furthermore, with so much investment activity increasing the stock of rental housing as well as the surge in dwelling approvals, we would expect that rental growth will remain sluggish across the capital cities. As a result we anticipate a further compression of gross rental yields in 2015,” the report concluded.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
