Australian property month in review: April 2017
House prices continued their record growth leading up to April, but they may have hit their peak.
While trends in the property market in April pointed to continued growth, there has been speculation that the booming housing markets of Sydney and Melbourne have reached their zenith.
The month began with figures from CoreLogic continuing to show skyrocketing house prices. The researcher’s monthly Hedonic Home Value Index showed capital city dwelling values up by 1.4% for March, for an annual growth rate of 12.9%, the highest since May 2010.
Sydney and Melbourne continued to dominate the housing market. Sydney saw an annual growth of 18.9% for March, its highest since November 2002. Melbourne also saw strong price gains, with dwelling values rising by 15.9% for the year to March.
The rental market also experienced strong performance. Figures from SQM Research showed nationwide vacancy rates falling after months of rises. The national vacancy rate edged down from 2.4% in February to 2.3% in March, while vacancies in Melbourne fell sharply from 2.0% to 1.5%.
SQM Research managing director Louis Christopher said vacancies fell in Sydney and Melbourne despite high levels of apartment construction. He predicted that the result was likely to put upward pressure on rent prices.
High levels of apartment construction are likely to continue as well. CoreLogic analysis released in April showed that unit construction outpaced house construction for the first time on record in the December 2016 quarter. CoreLogic researcher Cameron Kusher said that commencements were likely to fall in the months ahead, but that existing housing stock would take more than a year to clear.
In spite of this, investment bank UBS claimed this month that the Sydney and Melbourne markets had likely reached their peak and would see price corrections. In a note to clients, UBS said that it was “calling the top” of the Sydney and Melbourne markets and predicted that the prices were likely to moderate, though not collapse.