According to Tim Lawless, research director at CoreLogic, capital gains remained positive across Australia’s combined capital city housing markets. However, the pace of growth has declined when compared with previous months with October dwelling values rising by only 0.5%, compared with the 1.0% lift in September and the 1.1% rise in August. “The latest monthly housing market data takes the quarterly change in capital city dwelling values to 2.7% and 7.5% higher over the past twelve months,” noted the report.
Every capital city recorded a rise in dwelling values over the past three months, with the exception of Adelaide (-1.3%) and Perth (-1.5%). The Canberra housing market recorded the largest increase in values after a 5.6% quarterly rise. “The strong conditions across the Canberra market are largely related to rising house values, with unit values increasing at less than half the pace of detached housing,” observed Lawless.
Sydney continued to display strong annual capital gains, recording the largest year-on-year increase. Dwelling values in the Harbour City are now 10.6% higher than 12 months prior. Meanwhile, detached houses (+10.9%) are showing only a slightly higher rate of capital gain compared with units (+9.1%) across Sydney, emphasising the healthier supply versus demand dynamic that exists across the Sydney region for higher density housing.
Lawless said these findings point to a higher demand for Sydney units, mainly because Sydney houses have become too expensive. “Units generally provide a more affordable option for home ownership and investment for many buyers.”
The divergence in the performance between houses and units is most clearly evident in Melbourne and Brisbane. The annual rate of capital gains in Melbourne remains strong at 9.1%; however, there is a significant difference in growth rates between houses and units, with house values up 9.6% compared with a 5.6% increase in unit values over the past year.
Brisbane’s housing market has shown a larger capital gain spread, with house values up 4.7% compared with a 1.4% fall in unit values over the previous year.