- Home prices: The CoreLogic Home Value Index of capital city home prices rose by 1.0 per cent in September to stand 7.1 per cent higher over the year. Prices rose in all capital cities except Perth and Darwin. But regional prices were only up 1.4 per cent in the year to August (latest data).
What does it all mean?
It is clear that there is no single housing market. Housing prices are responding to the different population or demand influences as well as the different stages of the building cycle. Demand for homes in Sydney and Melbourne is supported by solid population growth while supply hasn’t caught up. Not yet, anyway – the process is underway. In contrast the increased supply of new homes in Perth is happening at a time of softening population growth. There have always been different cycles across the country and this time is no different.
Looking at the simple national dwelling price (capital cities and regions) on a three-month rolling average basis, home prices are up just 1 per cent over the past year. Looking over a 25-year period, annual price growth has averaged around 6 per cent. Over the last five years, annual growth was nearer to 3 per cent.
What do the figures show?
- The CoreLogic Home Value Index of capital city home prices rose by 1.0 per cent in September and was up 7.1 per cent over the year.
- In regional Australia, house prices fell 0.1 per cent in August and were just 1.4 per cent higher than a year ago. (regional prices cover just houses and data is up to the end of August).
- In capital cities, house prices rose by 1.0 per cent in September while apartment prices rose by 1.2 per cent. House prices were up 7.3 per cent on a year ago and apartments were up by 6.1 per cent.
- The average Australian capital city house price (median price based on settled sales over quarter) was $600,000 and the average unit price was $510,000.
- Dwelling prices rose in six of the eight capital cities in September: Canberra (up 2.4 per cent); Melbourne (up 2.3 per cent); Adelaide (up 2.1 per cent), Sydney (up 0.8 per cent); Brisbane and Hobart (both up 0.1 per cent). Prices fell most in Perth (down 2.5 per cent) followed by Darwin (down 2.2 per cent).
- Home prices were higher than a year ago in six of the eight capital cities. Prices rose most in Sydney (up 10.2 per cent); followed by Melbourne and Canberra (both up 9.0 per cent); Hobart (up 8.7 per cent); Adelaide (up 6.5 per cent); and Brisbane (up 3.0 per cent). Prices fell in Darwin (down 6.0 per cent) and Perth (down by 7.0 per cent).
- Total returns on capital city dwellings in the year to September rose by 10.9 per cent with houses up 10.9 per cent on a year earlier and units up 10.6 per cent.
- What is the importance of the economic data?The CoreLogic Hedonic Australian Home Value Index is based on Australia’s biggest property database. Unlike the ABS Index, which excludes terraces, semi-detached homes and apartments, the CoreLogic Hedonic Index includes all properties. Home prices are an important driver of wealth and spending.
What are the implications for interest rates and investors?
There is a fair debate on the accuracy of home price data. The bottom line is that prices are moving at different speeds across the country depending on the usual supply-demand influences. Recent trends aren’t a cause for concern. Using averages of settled sales across the entire country, prices are barely growing in annual terms.
Latest data shows that the Australian economy remains in good shape.
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