Momentum remains in the national housing market as the year draws to a close, but the pace of growth is decelerating.
Despite this, one city is set to shine in 2015 – and, appropriately, that city is the capital of the Sunshine state: Brisbane.
CoreLogic RP Data head of research Tim Lawless said that, across the combined capitals, dwelling values are now 8.5% higher than they were a year ago.
This comes against a backdrop of slowing conditions, after the annual rate of capital gain peaked at 11.5% earlier in 2014.
“Values are still rising at a healthy rate,” Lawless said. “But we anticipate that 2015 will see the housing market dynamic shift geographically.”
He said that, overall, 2015 be another solid year of housing market conditions and further capital gains, albeit at a more sustainable rate than seen in 2014.
According to Lawless, the outlook for each of the capital cities in 2015 is as follows:
The trend towards a more sustainable rate of capital gain will continue over 2015.
This is due to affordability constraints and a reduction in investor demand - which results from the low yield environment and tougher investment lending requirements.
The rate of capital gain should continue to slow in 2015 as investor demand is dampened by the low rental yield scenario and tighter finance controls around investment lending.
New housing supply in Melbourne’s inner city and outer fringes has been sufficient when compared with population growth. This is also likely to soften the level of capital gains over the coming year.
After ending 2014 at 7%, the rate of capital gain is expected to hold relatively firm.
Fewer affordability pressures and better rental yields than Sydney or Melbourne, means growth in Brisbane dwelling values should outperform the capital city average over 2015.
Increasing buyer demand, combined with tame affordability pressures and healthy rental yields, bode well for Adelaide.
Values aren’t expected to surge in 2015, but a steady market with values continuing to show a modest rise is likely.
Slowing population growth and reduced housing demand has hit Perth just as a large amount of new housing has been approved for construction. Plus the previously strong Western Australian economy is weakening.
These factors mean dwelling values are likely to continue their weak trend and could end 2015 lower.
Improved transaction numbers, remarkable comparative affordability and gross rental yields which are the second highest in Australia should prove beneficial.
Hobart dwelling values are expected to continue their moderate rise and trend higher during 2015.
A wind down in the major infrastructure projects currently underway in Darwin means that prospects for further growth over 2015 are diminishing.
The city still provides the highest gross rental yields of any capital city market, but investor demand is likely to taper in line with capital growth.
Uncertainty surrounding the local labour market, federal government job cuts and a potential housing oversupply mean that Canberra’s dwelling values are likely to be flat or falling in 2015.
“Lifestyle” markets are expected to continue their bounce back in buyer demand and values.
However, the downturn in commodity prices and mining related infrastructure spending is likely to dampen housing markets in resource intensive regions.
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