Capital city dwelling values continue to decline

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Capital city dwelling values recorded their first annual decline since November 2012, while regional dwelling values continue to edge higher, according to CoreLogic’s April Hedonic Home Value Index.

National dwelling values were 0.1% lower in April, the seventh consecutive month-on-month decline since values started retreating in October 2017.

Tim Lawless, CoreLogic’s head of research, said the declines were concentrated within the largest capitals, while regional dwelling values edged 0.4% higher.

Capital city dwelling values were 0.3% lower over the month, driven by major declines of -0.4% in Sydney and Melbourne, and a smaller decline in Brisbane (-0.1%). The declines were offset by flat conditions in Perth and subtle rises in Adelaide (+0.1%), as well as Darwin and Canberra (both +0.6%). Hobart was the only city where dwelling values rose by more than 1% in April (+1.2%).

On an annual basis, the combined capitals recorded the first decline in dwelling values since late 2012, with values dipping 0.3% lower. This drop was driven by falls in Sydney (-3.4%), Perth (-2.3%), and Darwin (-7.7%). The only capital to see an improvement in annual growth conditions relative to a year ago is Perth, where the rate of decline has slowed from -3% last year to -2.3% 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,” Lawless said. “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.”

Australia’s regional markets are also outpacing the capitals, and the past five years has seen the combined capital city dwelling values appreciate at the annual rate of 6.8%, nearly double the annual rate across the combined regional markets (+3.5%). In contrast, the past 12 months has seen capital city dwelling values drop by 0.3%, while regional values are 2.4% higher.

Unit values are also outperforming house values, with capital city detached house values recording an average annual growth rate of 7.3% over the past five years, while unit values were up 5.5% 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%, compared with a 1.0% fall in house values.”


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