AUSTRALIA’S PROPERTY MARKET ON THE UP AND UP
It appears the light at the end of the tunnel is shining brighter for Australia’s property market. Following years of consecutive downward turns, the market has indeed shifted a complete 180 degrees, delivering positive growth for the last four months running. Whether it be a result of continued rate and tax cuts or the shift in the media to a more positive outlook, it seems Australia’s confidence in the market has well and truly returned.
Corelogic have released their October data and we have seen growth increase for the 4th consecutive month and the greatest month-on-month gain in the national home index since May 2015.
Let’s break down the results state by state.
Sydney has recouped a third of the growth (5.3%) lost since the market bottomed out a few years ago. House prices rose by 1.8% and units 1.2% over the last month, putting it on par with values of three years ago. The higher end of the property market is contributing more strongly than the bottom, with premium properties seeing a 5.9% increase in value. Houses are staying on the market for less time (38 days as opposed to 44 days year ago), along with a reduction in discounts in order to sell. Despite the growth in the housing market, rents have continued to fall with a 0.1% loss over the last month.
Melbourne has seen the quickest turnaround having recouped 50% of their losses since the height of the downturn. October results saw a 2.3% increase in value from the previous month with an increase in houses of 2.4% and units 2.0%. Similar to Sydney, the higher end of the market is leading the growth with a 7.1% increase compared to 3.8% across the lower quartile of properties. Properties are staying on the market for an average of 32 days.
Brisbane has continued its upward trend in growth with house prices seeing a 0.9% increase and units 0.8% increase from September. Queensland’s capital isn’t performing quite at the level of its Sydney and Melbourne counterparts with properties staying on the market for an average of 59 days and 13.3% fewer properties sold over the past year as opposed to the previous year. The future looks bright for Brisbane however with strong housing affordability and high levels of economic activity in the region.
Despite waning growth over the year, Adelaide saw a 0.4% rise in October. This comes on the back of a relatively mild downturn in relation to our other capital cities, with Adelaide posting only a 1.2% downfall since December 2018. House prices have increased 0.5% while units fell (-0.4%) with houses staying on the market for an average of 53 days.
Unfortunately, Perth remains weak on the property growth chart, posting another 0.4% loss over October, bringing values down 21.6% since its peak in 2014. House process fell -0.4% over October and units -0.8% with houses staying on the market for an average of 60 days. In retrospect, rents have increased by 2.4%. Perth is now Australia’s most affordable capital city.
Hobart has enjoyed several years of booming property growth which appears to be coming to an end. House prices rose 0.9% and units 1.0% with houses selling on an average of 26 days. Which may seem quick however when compared to 11 days on the market a year ago, it does put the slowed growth in perspective.
Canberra has enjoyed some solid growth with an overall 2% increase in property values – 0.8% rise in house process and 0.1% for units. Its growth is expected to continue through to the new year with houses on the market for an average of 35 days.
Darwin continues to struggle with a sluggish economy, economic activity and housing process since its peak in 2010 with overall value sitting 30.8% lower. House process rose 0.7% with units falling -0.4% with an average of 78 days on the market. Darwin is set to be avoided as a 2020 investment destination with a poor predicted economic outlook.
Moving forward, continued rate cuts and loosening of credit restrictions will see confidence continue to be reinstalled in the property marketplace. Sydney and Melbourne will continue to lead the way with the majority of Australian capital cities to follow suit.