Modest house price gain a welcome one
House prices have posted a “welcomed” modest gain to close out the financial year.
The CoreLogic June Home Value Index has reported just a 0.5% rise for capital city dwelling values over the month. Five capitals saw a decline for the month, while Sydney, Melbourne and Hobart continued to see strong growth.
The results show house prices rebounding after CoreLogic reported a 1.4% quarterly decline for the final quarter of 2015.
“Importantly, the pace of capital gains in June was substantially lower than the April and May results when CoreLogic reported a 1.7%, and 1.6% month-on-month lift in capital city dwelling values,” CoreLogic Asia Pacific research director Tim Lawless said.
Lawless said the modest result was likely to be a welcome one.
“The monthly growth rate reduction is likely to be very much welcomed by state and federal government policy makers and regulators who may be concerned about a sustained rebound in capital gains.”
Lawless said Sydney home values have seen a cumulative increase of 59% over the past four years, while house prices in Melbourne grew 41% over the same timeframe.
“The combined capitals’ headline result was driven by a strong 1.2% rise in Sydney dwelling values, and a 0.8% gain across Melbourne’s housing market. Hobart values also showed strong conditions with dwelling values moving 1.8% higher over the month,” he said.
Lawless did draw a distinction, however, between prices rises in Sydney and Melbourne and those in Hobart.
“While the higher rates of capital gains in Sydney and Melbourne can be tied back to strong economic conditions, and high rates of population growth, the same cannot be said for Hobart where economic conditions and migration rates are gradually improving from a low base. The strength in the Hobart market comes after a long period of underperformance, where home values in the city increased by only 1.4% per annum over the past ten years. Potentially, the Hobart housing market is being fuelled by the sheer affordability of housing and a renewed trend towards Melbourne and Sydney buyers unlocking their equity to make lifestyle housing purchases.”