The pace of capital growth across Australia’s capital cities has eased further over October, recording growth of just 0.2% over the month.
Over the quarter to October, according to CoreLogic RP Data’s latest Home Value Index, capital city house prices increased by 1.4% over the month and 10.1% over year. This has eased significantly from last month, when house prices increased 0.9% over the month, 4% over the quarter to September and 11% over the year to September.
Australia’s hottest housing markets, Sydney and Melbourne, have also continued to see an easing in the rate of capital gain over the month of October, with Sydney values recording a modest rise of 0.3% and Melbourne house prices rising by 0.6%.
Adelaide and Canberra recorded the highest rate of capital growth over October, with house prices rising by 1.5% over the month in both cities. This was closely followed by Hobart, which recorded growth of 1.4%. Brisbane house prices actually declined over the month, with capital gains dropping 0.2%. House prices in Perth declined 2.0% over October.
According to CoreLogic RP Data head of research, Tim Lawless, the annual rate of growth across the combined capitals index has been easing since July this year when the index was rising at 11.1% per annum. He says this is due to a combination of a tougher regulatory environment, rising rates and increased supply.
“It’s not just the fact that mortgage rates have recently risen outside of any lift in the cash rate. We are also seeing approximately a 30% premium on investment related mortgage rates, tighter lending standards and borrowers generally requiring a larger deposit.
“Gross rental yields at record lows and affordability constraints are acting as a further disincentive, particularly in Sydney where the median unit price is equal to or higher than the median house price in every other capital city. Additionally, new housing supply is moving through record levels which should help to ease the upwards trajectory of home values.”