According to CoreLogic’s latest construction report, capital city dwelling values have recorded their first annual decline since November 2012, while regional dwelling values continue to edge higher.
Capital city dwelling values were 0.3 percent lower over the month, driven by larger falls of -0.4 percent in Sydney and Melbourne and a smaller decline in Brisbane values (-0.1 percent). The falls were offset by flat conditions in Perth and subtle rises in Adelaide (+0.1 percent), Darwin and Canberra (both +0.6 percent). Hobart was the only city where dwelling values rose by more than 1 percent in April.
On an annual basis, the combined capitals recorded the first decline in dwelling values since late 2012, with values slipping 0.3 percent lower, driven by falls in Sydney (-3.4 percent), Perth (-2.3 percent) and Darwin (-7.7 percent). The only capital city to see an improvement in annual growth conditions relative to a year ago is Perth, where the rate of decline has slowed from -3.0 percent last year to -2.3 percent over the past 12 months.
“At a macro level, the latest trends are virtually the opposite of what we have become used to over the past five or so years,” says CoreLogic head of research Tim Lawless.
“Regional areas are now outperforming the capitals and units are outperforming houses. Also the most expensive properties are now showing weaker conditions than the more affordable ones.”
Regional areas now outpacing capital cities
The past five years has seen combined capital city dwelling values appreciate at the annual rate of 6.8 percent, which is almost double the annual rate across the combined regional markets at 3.5 percent. The past twelve months has seen capital city dwelling values fall by 0.3 percent while regional values are 2.4 percent higher.
Units outperform house values
Capital city detached house values have recorded an average annual growth rate of 7.3 percent over the past five years, while unit values were up 5.5 percent per annum over the same period.
“Despite the surge in unit construction over recent years, the past twelve months has seen unit values continue to trend higher, up 1.9 percent, compared with a 1.0 percent fall in house values,” says Lawless.
More affordable housing stock has been resilient to value falls
Across the most expensive quarter of the market, dwelling values have increased at almost twice the pace of the most affordable quarter over the past five years, up 8.2 percent per annum compared with 4.4 percent per annum. As conditions have slowed down, it has been the most affordable end of the housing market where values have remained resilient to falls, trending 1.9 percent higher over the past twelve months while the most expensive quarter of properties has seen values fall by -1.6 percent.
For more information, download the full report for April 2018.
