Housing growth cycle moderates

The CoreLogic Hedonic Home Value Index for November found that capital city dwellings rose by 0.2 per cent throughout the month.

However, although the headline results remained in positive growth territory, CoreLogic head of research Tim Lawless noted that the overall growth rate has moderated when compared with its performance in recent months.

Mr Lawless pointed to the 1.5 per cent fall in the Melbourne index as the reason for the overall soft result. He commented: “Delving into the Melbourne results in more detail showed that unit values were down 3.2 per cent in November, while Melbourne house values declined by 1.3 per cent over the month.”

“It appears that higher unit supply is progressively weighing down the capital gains across Melbourne’s unit sector, with annual capital gains tracking at 3.9 per cent for Melbourne units compared with a 12.2 per cent annual gain in Melbourne house values.”

Mr Lawless said that a similar trend can be seen in Brisbane, which is also experiencing an increased supply of units across its key inner city regions.

“Brisbane house values were up 4.3 per cent over the past 12 months compared with a 0.9 per cent fall in unit values,” he explained.

“With the unit supply pipeline remaining substantial, we expect to see a continuation of weaker market conditions across those unit markets where high supply levels are dampening the prospects for higher value growth,” Mr Lawless concluded.

On an annual basis, the highest rate of capital city yearly growth is evident in Sydney and Melbourne where dwelling values are now 13.1 per cent and 11.3 per cent higher respectively.

Hobart and Canberra’s property markets have also seen some acceleration in growth rate, with dwelling values up 8.5 per cent and 8.4 per cent year-on-year respectively.

Notably, Darwin’s annual growth rate recorded a 1.1 per cent rise in dwelling values over the past year.

“The November results also show a rise in transaction numbers across the Darwin market over recent months, supporting the moderate improvement in market conditions that the hedonic index is showing,” Mr Lawless explained.

Meanwhile, Adelaide and Brisbane posted an increase of 4.7 per cent and 3.9 per cent year-on-year respectively.

Perth was the only capital city to post a decline in dwelling value growth, with a fall of 1.1 per cent year-on-year.

[Related: Capital city dwelling values reach ‘new record highs’]