Australia has two tier property price market as growth continues in Sydney and Melbourne
Residential property prices in Australia’s capital cities increased by 1.1% in the second quarter of 2014 with Sydney and Melbourne continuing to drive a two tier housing market in the country.
It means that the aggregate capital price gain across all capital cities since the beginning of the year is 5% but price growth varies considerably depending on location, according to the latest RP Data index.
Sydney saw prices increase by 2%, Canberra by 2.1% and Melbourne by 1.8% which offset falls in other capital cities.
Darwin saw mild growth of 0.8% while price fell by 2.6% in Adelaide, 1.2% in Hobart, 0.4% in Brisbane and 0.1% in Perth.
Broadly, capital city dwelling values have trended higher since June 2012 with the combined capitals index has recording a cumulative gain of 17.4%. The data shows that Sydney has seen the most growth, up almost 25% during this period, while Darwin saw growth of 20.4% and Melbourne 18.5%.
The lowest rate of capital gain over the current cycle was in Adelaide where values are just 5.5% higher, and in Canberra where values have recorded a 7.9% increase.
According to Tim Lawless, RP Data research director, despite the most recent set of data showing a rise, the growth trend has eased from the peak conditions recorded last year. Over the past six months, capital city dwelling values moved 3.7% higher compared with the peak rate of growth of 7.2% which was recorded over the six months to November last year.
Lawless said that over a similar time frame the growth in mortgage demand has started to ease, suggesting buyer demand may be being dampened by rising affordability hurdles and low rental yields in the largest cities.
Regional markets continued to languish and recorded a 0.7% fall over the June quarter and a year on year growth rate which is slightly higher than inflation at 3.5%.
‘Regional markets are of course diverse and range from agricultural regions which are largely driven by weather conditions and export factors, mining and resource-centric areas where the downturn in commodity prices and fewer major infrastructure projects are generally causing weak housing market conditions, and lifestyle markets where buyer demand is bouncing back and values are generally rising,’ Lawless explained.
Examination of the housing market across broad price segments reveals that the most expensive quarter of the combined capital city housing market has shown the highest capital gains over the past year. Dwelling values across the most expensive quarter of the capital city market are up 10.8% over the past 12 months compared with a 7.9% gain across the most affordable quarter of the market, and a 10.1% capital gain across the broad middle of the market.
Rental yields were down over the month, with capital gains continuing to outpace rental growth. The typical gross rental yield on a capital city dwelling fell to 3.9% in July from 4% in June, with Melbourne yields the lowest of any capital city at 3.4% gross, followed by Sydney at 3.9%…