Property prices are still rising in Australia’s capitals
Good news for investors, bad news for first home buyers.
The CoreLogic Home Value Index was released today, showing capital city dwelling prices rose by 0.7% in January, with Hobart, Sydney and Melbourne seeing the biggest increases. Overall growth was lower than December, at 1.4% across the capitals, but showed signs of heat in the Sydney and Melbourne markets, which both saw month-on-month increases of 1% and 0.8%, respectively.
Hobart saw an increase of 1.4% month-on-month, and also saw the largest increase over the past three months jumping 5.8%. All other capitals also saw increases except for Darwin, which saw a decrease of 1.7%.
“While the growth trend in smaller cities such as Hobart can show higher levels of volatility, clearly the Hobart housing market is now well into its growth cycle," CoreLogic head of research Tim Lawless commented. "Strong housing market conditions are being driven by positive affordability of housing, as well as improving economic conditions and stronger migration trends.”
All this could be seen as good news for investors who will see a continual increase for their return on investment, but it's less pleasing for first home buyers.
There was more bad news for buyers as housing affordability worsened in six of the eight capitals in December, according to the Housing Industry Association’s (HIA) Affordability Report released today. The biggest declines were in Melbourne (down 11.6%), Canberra (down 10.7%) and Sydney (down 7.3%), according to the HIA figures.
“During the December 2016 quarter, housing affordability across Australia worsened by some 7.3% due to the recent uplift in dwelling prices,” explained HIA senior economist Shane Garrett. “Housing affordability is front and centre in everyone’s mind once more. Whilst there is no single solution, there are some key policy levers that governments could use to provide some relief.”