Real estate prices in the capital cities of Australia increased by 3.8% during the first four months of this year but according to the latest data released by CoreLogic, they felt slightly by 0.9% in May. This was the first month on month drop in prices since last November and comes at a time when they had been edging upwards.
Up until now there has been exceptionally strong demand for property in Sydney while demand in Melbourne has been slightly weaker but still high. Even though prices fell slightly last month, experts expect this to only be temporary. All the indications are for stronger conditions in both Sydney and Melbourne due to auction clearance rates being close to all-time highs combined with low inventory levels. Experts think last month’s dip was most likely the result of a natural correction and point out that continued low interest rates combined with last month’s federal budget should help keep the momentum going in the real estate market.
The figures for May also coincide with the three years of growth which originally began at the end of May 2012. Since this time property values in capital cities have increased by 24.2% while property values in Sydney have increased by 39.3% since prices bottomed out in May 2012. In Melbourne property values have seen the second highest rate of growth and have increased by 22.4% while in Darwin property values are up by 18.3%. Real estate values have risen by 13.2% in Perth, by 10.6% in Brisbane, by 9.9% in Adelaide, by 8.3% in Canberra and by 7.7% in Hobart.
The article in Propertywire highlights the fact that although every capital city has seen some sort of price gains over the last growth cycle, price growth over the last year has been more diverse. During this time property values have decreased by 2% in Darwin and by 1% in Hobart. In Perth values are up by just 0.7% compared to a year earlier. In comparison, values have risen by 9% in Melbourne and by 15% in Sydney over the past year and it’s thought this is partially due to higher levels of investor interest combined with lower interest rates.
Economic conditions are strongest in Sydney and Melbourne and the cities also have the highest levels of new housing supply, particularly for new apartments. Experts feel this could be the reason why house values are rising more quickly in Sydney and Melbourne compared to unit values.