According to the RP Data-Rismark June Hedonic Home Value Index Results,
capital city dwelling values have shown a 1.4 per cent capital gain over the month
of June 2014.
RP Data research director Tim Lawless notes that the strong result has
partially reversed last month’s 1.9 per cent fall and provides a -0.2 per cent
decline in dwelling values over the June quarter. All cities, barring Adelaide
and Darwin recorded a rise in dwelling values.
Top performers for capital gains over the 2013-2014 financial year include
Sydney and Melbourne where dwelling values are up 15.4 per cent and 9.4 per
cent respectively across each city. The quieter Brisbane housing market is now
gathering some pace with dwelling values moving 7.0 per cent higher over the
past twelve months. Dwelling values have been cool in Hobart (2.5 per cent),
Canberra (2.9 per cent) and Adelaide (2.9 per cent) in the previous financial
Over the current growth cycle, capital city dwelling values are up 15.5
per cent, with Sydney recording the most significant capital gain at 23.1 per
cent growth since the end of May 2012. Adelaide’s housing market recorded the
least significant capital gain over the cycle to date, with dwelling values
rising by 5.6 per cent.
RP Data’s Tim Lawless explains the recent volatility in the
month-to-month Index could be a seasonal factor, with the recent reduction in
capital gains, likely a correction from the strong market conditions reported
over the first quarter of the year.
Sydney once again topped the list from a total returns perspective; the
capital gain combined with the gross rental yield over the year has provided
Sydney homeowners with a total return of 20.2 per cent over the financial year.
Melbourne, Darwin and Brisbane have also recorded a total gross return in
excess of 12 per cent over the year.
In the rental market segment, gross rental returns are currently
recorded at 3.9 per cent for capital city houses and 4.6 per cent for capital
city units. The yield environment is lowest across Melbourne where gross yields
are averaging just 3.4 per cent for a typical house and 4.3 per cent for units.
Darwin continues to show the highest gross rental yields at 6.1 per cent for
houses and 5.9 per cent for units.
With interest rates remaining low for the foreseeable future, it is
doubtful that housing values will start to slide; however, natural
affordability constraints will start to dent buyer demand, as will the low
rental yield scenarios that are very much evident across the largest capital
cities of Melbourne and Sydney.
Clearance rates are holding relatively firm, further reinforcing the
notion that the housing market isn’t set to show a market correction.