House values plunge across Australia

 

Dwelling values fell across five of the eight capital cities in Australia during November, according to CoreLogic RP Data November Home Value Index.

Sydney maintained the highest annual growth rate at 12.8 per cent, which is down from a peak rate of annual growth of 18.4 per cent in July earlier this year, while Melbourne’s annual growth rate has reduced from a recent peak of 14.2 per cent to 11.8 per cent over the 12 months ending November this year.

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The only capital cities where values have declined over the past year are Darwin (-4.2 per cent) and Perth (-4.1 per cent), where weaker economic conditions and a slowdown in population growth contributed to an early peak in housing market conditions in December last year.

The equivalent peak in the cycle for Darwin was May 2014. Since that time, Perth values are down a cumulative 5.9 per cent and Darwin values have fallen by a larger 6.8 per cent.

“The latest results are now placing downwards pressure on the annual change in dwelling values,” according to CoreLogic RP Data head of research Tim Lawless.

“The annual rate of growth across the combined capitals index peaked at 11.5 per cent back in April 2014, and has since reduced to 8.7 per cent.”

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“The fact that mortgage rates have risen independently of the cash rate has, in all likelihood, become a contributor to the slowdown in housing market conditions, as well as tighter lending practices evidenced by a recent reduction in lender risk appetite for investment loans and high loan to valuation ratio mortgages.

“Tighter mortgage servicing criteria across the board and affordability constraints in the Sydney and Melbourne markets are also having an impact on market demand,” Lawless added.

Highlights over the three months to November 2015

• Best performing capital city: Canberra +2.0 per cent

• Weakest performing capital city: Hobart -2.9 per cent

• Highest rental yields: Hobart houses with gross rental yield of 5.4 per cent and Darwin Units at 5.5 per cent

• Lowest rental yields: Melbourne houses with gross rental yield of 3.0 per cent and Sydney units at 4.1 per cent

• Most expensive city: Sydney with a median dwelling price of $810,000

• Most affordable city: Hobart  with a median dwelling price of $335,000