Property Market Update: Strong Start to 2017

March 7, 2017

Property Market Update: Strong Start to 2017

Despite talk that the Australian property market was going to bottom-out, nationwide it’s holding strong. Over the month, combined capital city home values rose by 0.7 percent. Hobart, Sydney, and Melbourne led the monthly gains. However, seven out of eight capitals recorded growth, including Perth.

Australian Home Values

Capital city property values increased by 0.7 percent over the last month. While this is half the rise recorded in the closing month of 2016, it is higher than October and November. Dwelling value rises over these months were 0.5 percent and 0.2 percent respectively.

CoreLogic RPData said that the gains were broad-based with most Australian capitals recording a rise. The only exception being Darwin. Hobart recorded the largest gains for the month at 1.4 percent, Sydney recorded 1.0 percent, and Melbourne 0.8 percent.

Regarding total gross returns, Sydney led the way at 19.7 percent, followed by Melbourne at 15.2 percent, and Hobart recording 13.6 percent. Also, Canberra, Adelaide and Brisbane are showing promise with total gross returns of 11.2 percent, 9.1 percent, and 9.0 percent.

Capital City Home Values at 31st Jan 2017
All Dwellings
City % Change Month % Change Quarter % Change Year Total Gross Returns Median Dwelling Values
Sydney 1.0 2.7 16.0 19.7 $850,000
Melbourne 0.8 2.4 11.8 15.2 $640,000
Brisbane 0.1 1.1 4.4 9.0 $490,000
Adelaide 0.5 1.4 4.8 9.1 $426,000
Perth 0.2 2.1 -3.2 0.5 $480,000
Darwin -1.7 1.8 -0.7 4.4 $490,000
Canberra 0.4 0.1 6.7 11.2 $601,500
Hobart 1.4 5.8 7.8 13.6 $366,000

Source: CoreLogic RPData

Hobart, Perth and Darwin

Smaller capitals, such as Hobart tend to have higher market volatility. Although, as seen over the last 12-months, Hobart’s property market is now well into its growth cycle. Housing market conditions in the capital are strong with affordable housing, increased migration, and a stabilising economy driving the market.

Perth and Darwin markets, on the other hand, appear to have hit rock-bottom. Since dwelling prices peaked in these capitals values dropped by 7.7 percent in Perth, and by 7.5 percent in Darwin. Based on this, over the last 3-months, Perth dwelling values rose by 2.1 percent, and Darwin by 1.8 percent. Plus, transaction numbers are increasing in these capitals, which is a strong sign that the market is turning.

Property market experts suggest buyers in these markets still have good leverage as listing numbers are high. Furthermore, selling times are long, which means sellers are open to offers and discounting. With economic conditions improving, buying in these capitals now is ideal for those seeking to make higher capital gains later. While these markets are recovering, it will be some time before dwelling values will reach their peaks again.

Investment Data

Rental yields and capital growth have fallen since peak levels, but they are still strong. For the month, Hobart recorded the highest rental yield for units at 5.8 percent, followed by Brisbane at 5.2 percent. Hobart and Darwin recorded the highest house rental yield at 5.0 percent. Subsequently, Brisbane and Adelaide followed these capitals recording 4.1 percent and 4.0 percent respectively. In terms of capital growth, Hobart recorded the highest level over the month at 1.8 percent escalation. Darwin, on the other hand, recorded the highest capital growth for units at 4.6 percent.

Capital City Growth and Yields at 31st Jan 2017
Homes Units
City % Capital Growth Month % Rental Yield Month Median Value % Capital Growth Month % Rental Yield Month Median Value
Sydney 0.5 2.8 $970,000 3.0 3.8 $725,000
Melbourne 0.7 2.7 $711,000 1.3 4.0 $510,000
Brisbane 0.1 4.1 $520,000 -0.1 5.2 $380,000
Adelaide 0.6 4.0 $450,000 0.3 4.7 $350,000
Perth 0.0 3.6 $500,000 2.0 4.1 $390,000
Darwin -3.3 5.0 $519,500 4.6 3.4 $415,000
Canberra 0.2 4.1 $650,000 1.8 4.1 $425,000
Hobart 1.8 5.0 $391,300 -2.1 5.8 $304,300

Source: CoreLogic RPData


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