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Capital gains push higher in August

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Capital gains push higher in August

James Mitchell 3 minute read

The CoreLogic Home Value Index recorded a 1.1 per cent rise in dwelling values in August, with six of the eight capital cities recording a lift in dwelling values over the month.

In Sydney and Melbourne, dwelling values continued to increase at more than 1 per cent month-on-month, with the cumulative growth over the cycle (June 2012 to date) now reaching 64 per cent in Sydney and 44 per cent in Melbourne.

“This result highlights the differences in growth trends across the capital cities over the same time period,” the report noted.

Outside of Sydney and Melbourne, the third highest rate of capital gain over the cycle to date was in Brisbane at 18 per cent, and was as low as 4 per cent over this same period in Darwin.

CoreLogic head of research Tim Lawless said, despite a strong month-on-month reading, the pace of annual capital gains has trended lower compared with the 2015 peak in growth conditions, when capital city dwelling values were rising at 11.1 per cent per annum.

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“The most recent 12-month period has seen dwelling values rise by a lower 7 per cent per annum. However, the rate of annual growth in Sydney has virtually halved from a recent 18.4 per cent peak to the current annual rate of 9.4 per cent. Similarly, in Melbourne the annual growth trend peaked at 14.2 per cent per annum last year and has since tracked back to 9.2 per cent per annum over the most recent 12-month period,” Mr Lawless said.

Perth and Darwin remain as the only capital cities to record a fall in dwelling values over the most recent 12-month period, declining by 4.2 per cent in both cities.

Mr Lawless said softer economic conditions and a significant fall in overseas migration rates, together with an increasing net outflow of residents to other states and territories, has made a substantial dent in housing demand.

“This has resulted in corresponding declines in both dwelling values and rental rates. For the remaining capital cities, each city continued to show a modest trend in value appreciation. Signs are emerging that the pace of capital gains may be accelerating across Canberra and Hobart, with dwelling values up 7.6 per cent and 6.5 per cent respectively over the past 12 months.”

Mr Lawless highlighted that one year ago, Canberra’s annual growth rate was negative, at 0.9 per cent, while in Hobart, values increased by only 1.5 per cent.”

“While the annual growth trend is now lower than it was one year ago, the rate of capital gains remain well above other benchmark measures such as inflation, income growth and rents, which is pushing already stretched affordability ratios to new record highs,” he said.

[Related: ANZ says lending curbs will continue to cool property market]

 

Capital gains push higher in August
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James Mitchell

James Mitchell

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.

He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.

James holds a BA (Hons) in English Literature and an MA in Journalism.

 

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