Australia’s housing market is gradually responding to higher mortgage rates, more stringent credit policies, and affordability challenges, with the quarterly trend in capital gains moderating relative to early 2017, according to CoreLogic’s July 2017 Home Value Index results.
The index recorded a 1.5% rise in dwelling values across the combined capital cities for July. And while most individual capital cities recorded a rise in dwelling values, Melbourne’s 3.1% gain was a significant driver for the strong monthly result across the combined capitals.
According to Tim Lawless, CoreLogic’s head of research, the latest housing market results highlight the diversity of housing market conditions, with dwelling values down over the month in Brisbane (-0.6%), Perth (-1.3%), and Darwin (-1.2%).
“The recent bounce in capital gains may be partially due to a recovery from the seasonal slump in values recorded in April and May,” Lawless said. “However, other factors, such as stamp duty concessions for first-home buyers in New South Wales and Victoria, may also be having a positive impact on market demand.”
Lawless added that it was still too early to measure the effect of the first-home buyer incentives, which went live on July 1st. “However historically, the first-time buyer segment has been very responsive to stimulus measures.”
Despite the higher month-on-month capital gains recorded for June and July, the quarterly trend rate of growth has clearly declined. The rolling quarterly pace of capital gains across the combined capitals has dropped from 3.6% in February to 2.2% at the end of July.
The slowdown in growth conditions is most evident across the hottest markets, with the quarterly growth trend reducing from 5% in Sydney earlier this year to 2.2% at the end of July. Melbourne growth conditions have also slowed, though to a lesser degree, with growth easing from a 2017 quarterly peak of 5.5% to 4.2%.
In contrast, Perth and Darwin have continued to see dwelling values slip over the month, taking the cumulative decline to 10.2% in Perth and 14.5% in Darwin since both markets peaked in 2014.
“The ease in the rate of decline has been most visible in Perth, providing a signal that the Western Australian capital may be approaching the bottom of the downturn; listing numbers have been falling across Perth which is a positive sign of improving conditions, and transaction numbers have found a new floor at around 2,500 sales per month,” CoreLogic said.
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