Wednesday, July 02 2014
Source: Australian Property Investor magazine
Australia’s capital city dwelling values ended the 2014 financial year up 10.1 per cent, according to the RP Data Rismark Hedonic Home Value Index.
Sydney and Melbourne saw the largest gains, reflecting 15.4 per cent and 9.4 per cent respectively.
Brisbane had the third strongest year at seven per cent, while Darwin at 5.7 per cent and Perth at 5.2 per cent filled out the top five spots.
On a monthly basis, RP Data reports a 1.4 per cent increase in capital city house values with all cities recording a rise except Adelaide and Darwin.
Tim Lawless, a research director at RP Data, says this has partially reversed last month’s 1.9 per cent fall and reflects an overall decline of 0.2 per cent in dwelling values during the June quarter.
Lawless says this softening is a reaction to growth earlier this year.
“The recent reduction in capital gains is likely a correction from the strong market conditions reported over the first quarter of the year.”
Lawless believes long-term trends are the best indication of performance.
“It (the trend) shows that the quarterly rate of growth peaked across the Australian housing market in August last year at four per cent.
“Since that time the rate of capital gain has generally trended towards a more sustainable level.”
Combining rental returns with capital gains produces a staggering 20.2 per cent total return for Sydney investors over the course of the year.
Melbourne, Darwin and Brisbane have also recorded a total gross return in excess of 12 per cent during the period.
Lawless says low interest rates will continue to support property values.
“What is more likely is that natural affordability constraints will start to dent buyer demand, as will the low rental yield scenario’s that are very much evident across the largest capital cities of Melbourne and Sydney.”