Written by Stefan Kostarelis
While the housing market is finally showing signs of cooling down in Sydney and Melbourne, home values in Adelaide are increasing.
According to CoreLogic’s Hedonic Home Value Index, which was released today, home values in Adelaide have risen 2% in the last three months. This is more than any other capital city.
Adelaide also had the strongest May, with a 0.8 percent increase in dwelling values.
Meanwhile, values in Sydney (-1.3%) and Melbourne (-1.7%) both dropped, dragging the national average (-1.1%) down with them.
Perth (-0.4%), Hobart (-4.8%), Darwin (-3.5%) and Canberra (-0.1%) all decreased too. Making Brisbane (+0.3%) the only other capital city to post gains for the month.
CoreLogic’s Head of Research, Tim Lawless noted that May is typically a weaker time for housing values.
“The May home value results should be viewed in the context of demonstrated seasonality; values have fallen during May in four of the past five years.” He said.
“Reading through the seasonality indicates that value growth in the market has lost momentum, particularly in Sydney and Melbourne where affordability constraints are more evident and investors have comprised a larger proportion of housing demand.”
He added that regulatory measures and a drop in consumer confidence were fueling the overall decrease in home values.
“Mortgage rates are continuing to trend higher, particularly for investors… Consumer sentiment towards housing, as measured by Westpac and the Melbourne Institute, has shown a marked downturn in May.” He said.
Looking at year-on-year values, Melbourne came out on top (11.5%), closely followed by Sydney (11.1%), Hobart (5.8%) and then Canberra (5.7%). Adelaide came in at fifth (2.9%), followed by Brisbane (2.3%). Perth (-3.8%) and Darwin (-6.4%) were the worst performers and the only two capital cities to show declines.
Combined year-on-year growth for all capitals was 8.3%.
The report also examined auction markets throughout May, finding them healthy, albeit with a slight decline in clearance rates in the two biggest markets.
Sydney has been particularly affected, with clearance rates trending down from the 80-85% down to the 70-75% range. In the final week of May, Melbourne’s clearance rate hit 74%, the lowest it’s been this year.
Despite an overall decline in dwelling values for May, the report found that weekly rents continue to rise gradually. Capital city rents showed their strongest growth rate since March 2014, with asking rents 4.2% higher over the past year.
Recently, there have been murmurs that the housing market may have peaked, and Lawless closed the report by addressing this claim.
“The jury is still out on whether the housing market has peaked, however, if it hasn’t, a peak could be just around the corner.” He said.
“Based on CoreLogic data, as well as other indicators, it’s fair to say that growth conditions appear to be slowing in Sydney and Melbourne while the performance across other capital city regions remains mixed. The housing market remains as diverse as ever and the flow of data over coming months will be critical to get a better understanding of the trends.”