House prices growing at lightning pace
Australia’s house price growth continues unabated, with Sydney seeing its fastest pace of annual growth in nearly 15 years.
CoreLogic’s March Hedonic Home Value Index shows that capital city dwelling values rose 1.4% for the month, for an annual growth rate of 12.9%. The rate was the highest annual growth rate since May 2010. Four of Australia’s eight capital cities have seen annual growth rates above 10%, with Sydney and Melbourne continuing to lead the pack at 18.9% and 15.9%, respectively.
While most capital cities saw strong growth, Brisbane and Adelaide remained sluggish. Brisbane values were up 3.7% for the 12 months to March, while Adelaide values were up 3.4%. Perth and Darwin continued to decline. Perth home values fell 4.7% for the 12 months to March, and Adelaide values were down 4.4%.
There was also a disparity between house values and unit values. House values grew 13.4% over the 12 month period, while unit values were up 9.8%.
“The disparity in growth rates is more significant in those cities where high new unit supply is more apparent. In Melbourne, house values were 17.2% higher over the past 12 months compared with a 5.2% increase across the unit sector. Similarly, in Brisbane, house values were 4.0% higher over the past 12 months compared with a 0.2% rise in unit values over the same period,” CoreLogic head of research Tim Lawless said.
Lawless said the strong growth in home values could face headwinds in the months ahead, particularly from new restrictions on investment lending from the Australian Prudential Regulation Authority (APRA) and rising home loan interest rates.
“Furthermore, organic constraints in the market are becoming more pronounced. As examples, record-low rental yields, which imply dwelling values are out of balance with rents, and heightened affordability constraints are preventing some prospective buyers from participating in the market,” Lawless said.