National dwelling values held firm in March, with regional values recording a 0.4% rise. This helped offset a 0.2% decline across the combined capital city markets, according to CoreLogic’s March Hedonic Home Value Index.
Combined capital city home values were down 0.9% over the March quarter, while home values across the combined regional markets were up 1.1%.
According to Tim Lawless, head of research at CoreLogic, Australia’s regional markets are now consistently outperforming the combined capitals.
“The stronger combined regional markets’ performance continues a trend that began to emerge in October last year where regional housing markets showed an overall improvement in the pace of capital gains while the combined capitals trend softened,” he said.
Six of the eight capitals have recorded a decline in values over the first quarter of 2018, led by Sydney (-1.7%). The other five capitals—Melbourne (-0.5%), Adelaide (-0.4%), Perth (-0.2%), Canberra (-0.2%), and Darwin (-0.1%)—recorded milder declines over the quarter.
“The broad-based falls highlight that the softening trend in the Australian housing market is largely due to weaker conditions in Sydney, however, most other capitals are also recording subtle falls,” Lawless said. “Dwelling values were steady over the quarter in Brisbane and have continued their strong run of growth across Hobart, up +3.4%.”
Unit sector in Sydney and Melbourne outperforming detached housing market
CoreLogic’s March home value indices also confirm that the unit sector is now consistently outperforming the detached housing market, “a trend which has been evident since mid-2017,” according to Lawless.
“The stronger performance is subtle at the combined capitals level: capital city house values were down 1% over the March quarter while unit values were down a more moderate 0.7%,” he added.
More significant differences between houses and units can be seen in Australia’s two largest cities, where housing affordability pressures are more evident relative to other cities.
Sydney’s unit values are up 1.9% over the past twelve months, while house values are down 3.8%. In Melbourne, unit values are 6.6% higher over the past twelve months, while house values are up 4.9%.
“The stronger performance from the unit sector may suggest that buyer demand is becoming more concentrated in the medium to high density sector where entry prices are lower and commuting times are often more convenient when compared with the detached housing markets around the outer fringes of the city,” Lawless said.
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