According to CoreLogic, the Australian housing market has been generally trending upwards in the past 4 years. However region to region there have been several capital city markets that have been outperforming the majority of the country.
The Sydney and Melbourne markets have significantly outperformed other capital cities, with the exception of Brisbane which has seen a moderately positive growth. But now both Sydney and Melbourne growth rates are beginning to ease. In contrast, Canberra, Hobart and Adelaide have seen some growth in the pace of capital gains while Perth and Darwin’s downward trends continue.
Regionally, lifestyle and coastal markets have been lifted by a demand for housing in these areas whilst mining related regions weigh down the overall growth trend.
New South Wales
According to CoreLogic, New South Wales outperforms every state in capital gains. Since June 2012 home values have risen a cumulative 64.9%, with the past 12 months seeing a rise of 10.2%, mainly fuelled by the Sydney property market. Regional NSW is seeing housing market growth at a more subdued pace, mainly in coastal markets and major centres.
The Sydney property market is beginning to gather pace due to a combination of property demand being high and property availability being low, but long term this will likely not continue. Affordability continues to be the critical issue affecting the Sydney market. While the recent RBA initiated rate cut and NAB’s anticipation that a further 50bps is easing the strain on some buyers, it is also helping to keep up demand. These factors suggest that housing prices are likely to be maintained at current levels or push higher in the short term.
The NAB Residential Property Survey showed that market sentiment was up in the September quarter, hitting its highest level since 2014. This means that there is likely to be short term upward pressure on prices. However, the supply side is starting to change with the record number of residential construction projects progressively coming to completion. This is expected to ultimately have a moderating effect on house price growth, and likely to lead to a decline in apartment prices during 2017.