Capital cities finish 2016 ‘on front foot’

According to the Domain Rental and House Price Report for the December 2016 quarter, median house prices increased in six of the eight capital cities during the period.

Sydney posted the most significant growth of all the state capitals, with its median house price rising by 4.7 per cent to $1,123,991.

Hobart’s house prices also performed strongly over the quarter, increasing by 6.2 per cent to $382,888. This was closely followed by Canberra, which posted a quarter-on-quarter jump in house prices of 5.6 per cent to $684,395.

House prices in Melbourne also grew by 3.6 per cent to $795,447, in Brisbane by 2.3 per cent to $540,758 and Adelaide by 1.0 per cent to $501,166.

Meanwhile, house prices in Perth and Darwin dropped by 0.5 per cent during the quarter to $573,766 and $591,167 respectively.

“While the price falls in Perth have continued over the December quarter, the quarterly rate of decline is easing, suggesting that the local market and house prices may be finally reaching a balancing point following the slowdown of the resources boom,” Domain chief economist Dr Andrew Wilson commented.

According to Domain, the Darwin median house price is now the lowest recorded in the local market since December 2011.

However, Mr Wilson emphasised that the city’s housing market is showing signs of balancing out.

“The December result follows a steady outcome over the previous quarter and is a significant improvement on the sharp declines recorded over the first six months of 2016,” he said.

Mr Wilson remarked that overall, capital city housing markets ended 2016 on “the front foot”.

“Prices in the top performing markets of Melbourne and Sydney continue to grow, driven by surging migration and strong local economic performances,” he said. “By contrast, Perth and Darwin are still experiencing the market downturn brought on by the end of the resources boom, although signs are emerging that those markets may now be balancing out.”

Mr Wilson noted that lower interest rates were the overarching stimulus for price growth last year, as official cuts from the RBA in May and August revitalised housing markets.

“In 2017, more neutral outcomes are likely for interest rates, suggesting that house price growth in capital city housing markets will steady,” he concluded.

[Related: No correction on the cards for Sydney property]