July Market Outlook
CoreLogic National housing Update July 2017
7 Factors That Influence a Home Buyer’s Decision by CoreLogic
Stamp duty and first home owner grant changes in effect across Australia
The difference between owner-occupier and investment interest rates
Adelaide July 2017
Brisbane July 2017
Cairns July 2017
Canberra July 2017
Darwin July 2017
Gold Coast July 2017
Melbourne July 2017
Newcastle July 2017
Perth July 2017
Regional NSW July 2017
Regional NT July 2017
Regional QLD July 2017
Regional VIC July 2017
South West WA July 2017
Sydney July 2017
Tasmania July 2017
Wollongong July 2017
CoreLogic QLD housing Update July 2017
CoreLogic SA housing Update July 2017
CoreLogic VIC housing Update July 2017
CoreLogic WA housing Update July 2017
Should you rent out your home on Airbnb?
How to calculate the cost of buying a home in Australia
Mortgage myth buster: things you need to know about mortgages
July Market Outlook
Cameron Kusher, CoreLogic Research Analyst
Despite a seasonally strong monthly result for June, the pace of capital gains slowed over the June quarter, with capital city dwelling values rising by only 0.8%, substantially lower than the March quarter when dwelling values were 3.5% higher. At the end of June 2017, the total value of residential property nationally was estimated at $7.1 trillion.
The 0.8% quarterly increase in dwelling values was the weakest quarterly growth rate since December 2015. Brisbane and Perth were the only capital cities in which value changes over the second quarter of this year were stronger than those over the first quarter. Across the individual capital cities, the quarterly change in values were recorded at: 0.8% in Sydney; +1.5% in Melbourne; +0.5% in Brisbane; –0.2% in Adelaide; +0.1% in Perth; –1.3% in Hobart; –5.2% in Darwin; and –0.4% in Canberra.
Capital city dwelling values have increased by 9.6% over the 12 months to June 2017. At the end of the first quarter of this year, dwelling values had recorded an annual gain of 12.9%, which was their fastest annual pace of growth throughout the current five-year period of growth. The slower annual growth is yet another indicator that suggests some of the heat has come out of the market. Across the capital cities, the annual rate of value change has been recorded at: +12.2% in Sydney; +13.7% in Melbourne; +2.0% in Brisbane; +2.4% in Adelaide; –1.7% in Perth; 6.8% in Hobart; –7.0% in Darwin; and +9.6% in Canberra. In all capital cities except Perth, the annual rate of change is now lower than it was at the end of the previous quarter.
Annual data also continues to show that the unit market’s growth performance is lagging that of detached houses. Over the past year, combined capital city house values have increased by 10.3% with the changes across the cities recorded at: +13.0% in Sydney; +15.0% in Melbourne; +2.5% in Brisbane; +2.7% in Adelaide; –1.9% in Perth; +7.4% in Hobart; –6.2% in Darwin; and 9.7% in Canberra. Combined capital city unit values have increased by +5.1%, with individual capital cities recording changes of: +8.6% in Sydney; +1.5% in Melbourne; –3.2% in Brisbane; –1.3% in Adelaide; +0.5% in Perth; +1.5% in Hobart; –10.5% in Darwin; and +7.6% in Canberra. Perth was the only capital city in which growth for units has outperformed houses over the past year, with several cities having seen the change in values for units less than half that of houses.
The auction markets have continued to slow over the past month. Although clearance rates are still indicative of value growth, they are hovering around their lowest levels in a year in both Sydney and Melbourne. Sydney’s auction clearance rate has been below 70% for each of the past four weeks, which last occurred at the end of 2015. In Melbourne, clearance rates have been 71% or lower over each of the past three weeks, which hasn’t occurred since early July last year.
The number of new properties being brought to market remains elevated relative to a year ago in several capital cities. This could be due to a number of factors, but is unusual to see at this time of year when new listing activity is typically quite low. Sydney (+18.2%), Melbourne (+12.1%), Brisbane (+0.4%), Hobart (+19.4%) and Canberra (+8.7%) are all seeing more new properties listed for sale relative to volumes a year ago. The number of new property listings is lower than a year ago in Adelaide (–0.6%), Perth (–7.3%), and Darwin (–3.7%).
The total number of properties advertised for sale is slightly lower than at the same time last year across the combined capital cities; however, the individual results are quite varied. Total listings are lower than they were a year ago in Melbourne (–0.8%), Brisbane (–0.3%), Perth (–9.8%), Hobart (–30.1%) and Darwin (–1.0%). Sydney (+11.1%), Adelaide (+1.5%), and Canberra (+7.3%) were the only capitals in which total listings were higher over the year. It is important to note that stock levels are declining across virtually all cities; however, in a handful of cities – most notably Sydney – the amount of stock for sale is elevated relative to a year ago.
The investor segment of the market is clearly now also slowing with both housing finance and credit data pointing to cooling demand. This is not really a surprise given the level of repricing of investor mortgages. The Reserve Bank now reports that on average, investor borrowers are, based on standard variable mortgage rates, paying an additional 55 basis points worth of interest relative to owner occupiers. The hiking of mortgage rates, along with record-high levels of housing debt, deteriorating affordability in Sydney and Melbourne, and record low rental yields, are making investment a much less attractive prospect.
The June quarter saw a slowing of value growth; while this can be somewhat attributed to seasonality, we are expecting capital growth in the housing market to continue to slow throughout the second half of this year. The hiking of mortgage rates for investors is also likely to impact on the Sydney, and to a lesser degree Melbourne; markets more so, given that these two cities have seen much higher levels of investor purchasing than has been seen elsewhere. Therefore, we expect that the housing markets in these two cities will continue to slow over the coming months.
While Sydney and Melbourne are expected to see value growth slow, we may see a further acceleration of growth in Canberra and Hobart, largely due to relative affordability in these cities and improving economic conditions. Brisbane and Adelaide are expected to continue to see only moderate rates of growth, which are generally in line with household income growth. Perth’s housing market looks to be starting to stabilise. With flat conditions over the quarter, fewer properties for sale and increasing transactions, the worst of the falls are probably now past. Finally, Darwin’s housing market looks as if it is likely to persist; however, it could follow the recent improvement we’re seeing in Perth, given it is also seeing sales volumes increase and listing volumes fall.
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.