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Sydney Housing Market Update | October 2017 - YouTube
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- Welcome to Core Logic's
October housing market update.
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This month we're providing an overview
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of how the housing market performed
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over the September quarter
and we're reviewing
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some of the factors
contributing to a slowdown
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in the rate of capital gains.
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CoreLogic's National Home Value Index
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edged 0.2% higher over
the month of September,
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with dwelling values over
the capital cities of 0.3%,
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compared with a 0.1% rise
across the broad regional areas
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of the country.
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The latest figures take
national dwelling values
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half a percent higher over
the September quarter.
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That's the slowest pace
of quarterly capital gains
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since June of 2016.
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Focusing on the capital cities,
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dwelling values were 0.7% higher
over the September quarter,
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which is well below the
recent peak rate of growth,
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which was recorded back over
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the 3 months ending November 2016.
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Back then the quarterly rate of growth
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was appreciating at 4.2%.
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The slowing in the combined
capitals growth trend
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has been heavily influenced by conditions
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across the Sydney housing market,
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where capital gains have stalled.
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Sydney dwelling values posted
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a month on month fall
in September, down 0.1%
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and the September quarter
saw Sydney values edge
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only 0.2% higher, a far cry
from the peak rate of growth,
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recorded over three months
to October last year,
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when Sydney dwelling values were rising
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at the quarterly pace of 6.4%.
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While the Sydney rate
is looking increasingly
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like it's moved through the peak,
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conditions across the
Melbourne marketplace
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have been more resilient.
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The pace of capital gains has slowed,
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but dwelling values are still 2% higher
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over the September quarter.
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Hobart further cemented it's position
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as the best performing housing market
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after a recent history of
sluggish growth conditions.
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The past 12 months have
seen Hobart dwelling values
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surge by 14.3%, the city's
highest annual growth rate
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since 2004.
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The remaining capital cities have shown
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a diverse performance over recent months.
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Perth dwelling values look to be moving
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through the bottom of the cycle,
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with values edging 0.1%
higher over the month,
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however values remained
lower over the quarter
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and over the year.
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For Darwin the housing
market isn't showing
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the same signs of bottoming out,
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with dwelling values slipping 0.7% lower
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over the month and 4% lower
over the September quarter.
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In Brisbane the market's been
showing a growing divergence
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between the performances of
houses compared with units.
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House values are up 0.2% over the month,
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to be 4% higher over the past year,
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while unit values show and
increase over the month,
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but remain 2 1/2% lower
over the past year.
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Adelaide dwelling values
held firm over the month.
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They've shown a 5% rise
over the past year.
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Canberra dwelling values
have increased by 7.8%
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over the past year, with a
fairly significant divergence
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between the growth in houses and units.
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Across the regional areas of Australia,
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growth rates have generally been lower
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compared to the capital
cities performance.
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The combined regional housing
market saw dwelling values
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unchanged over September
quarter, compared with
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a 0.7% rise in capital
city dwelling values.
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Similarly, over the past 12 months,
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regional values were
up 5.6%, compared with
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an 8.5% rise in capital city values.
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Despite the overall weaker performance,
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growth rates have been remarkably strong
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in some regional markets,
particularly those
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adjacent to the Sydney Metro area.
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The strongest regional performer was
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the Newcastle and Lake Macquarie region,
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where values were up by 15.3%
over the past 12 months.
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Southern Highlands and Shorehaven
values were up by 14.3%
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and in Illawarra, where values were 13.5%,
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rounded out the top 3 regional markets,
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based on the 12 month change in values.
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In Victoria the strongest regional market
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was Geelong where growth was 11.4%.
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While in Queensland it
was the Sunshine Coast
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with an annual gain of 6.6%.
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Across the Sydney housing market,
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it was the detached sector that pulled
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the monthly and quarterly
growth figures down,
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while unit values are also
appreciating at a slower rate,
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detached housing values actually
fell by .3% over the month
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and there were 0.2%
lower over the quarter,
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while unit values actually
recorded a subtle rise.
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The Sydney housing market doesn't share
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the same sort of concerns
around unit oversupply
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that's affected the Brisbane unit sector
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and to a lesser extent, Melbourne's.
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Potentially the affordability challenges
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facing Sydney buyers, within
the detached housing sector,
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are also pushing some demand
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towards the medium to high density sector,
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where based on median
values, houses are almost
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$300,000 more expensive than units.
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The slowing in housing market conditions
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shouldn't come as a surprise,
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considering the recent history
of dramatic capital gains
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across the Sydney and Melbourne markets.
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Since dwelling values
started rising in 2012,
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Sydney values have surged by 75%,
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while Melbourne values are up by 57%.
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Macroprudential changes introduced by APRA
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at the end of 2014,
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and more recently in March of this year,
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have played a key role in
curbing the pace of appreciation.
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Particularly in Sydney,
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where investment has
been most concentrated.
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On the back of change regulations,
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investors and interest only borrowers
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now face a premium on
their mortgage rates.
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Based on the data to the end of August,
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variable rate investment loans
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were typically attracting
a 60 basis point premium.
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While we expect growth rates
to continue moderating,
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at least for a macro perspective,
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driven by Sydney and to a
lesser extent Melbourne,
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there are other factors that are likely
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to keep a floor under housing values.
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Housing demand fueled by strong migration
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has risen during 2017, with
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the Australian Bureau
of Statistics reporting
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the third highest net overseas
migration result on record
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over the March quarter of 2017.
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Australia added more
than 86,000 new residents
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from overseas over the quarter.
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Most of which will contribute
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to demand for Australian housing.
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Almost 75% of these migrants
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arrived in New South Wales or Victoria.
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While investors are likely to scale back
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due to disincentives, such
as high mortgage rates
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and low rental yields, first home buyers
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are a rising presence
in the housing market.
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Based on July data, first home buyers
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reached their highest level since 2013.
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Stamp due to concessions that
became available in July,
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for first time home
buyers in new South Wales
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and in Victoria helped to
push the number higher,
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but in other states where
incentives were unchanged
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also saw high proportions of
first home buyer activity.
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Additionally, mortgage rates are likely to
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remain close to historic lows.
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Although the cash rate may rise in 2018,
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the likelihood of a substantial
lift in mortgage rates
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remains very low, considering
household debt levels
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are at record highs.
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Overall we're expecting that
growth rates will continue
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to moderate across the combined
capital cities of Australia.
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However, the slowdown
will likely be influenced
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by weaker conditions in Sydney
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and to a lesser extent in Melbourne.
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We'll be tracking the movements
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in housing market conditions, along with
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other key economic and demographic trends
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at www.corelogic.com.au.
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