While the property market celebrates the latest data which suggests the market may be cooling, one industry figure points out that compared with previous housing market cycles, the current growth phase wasn’t too aggressive.
The RP Data CoreLogic
Home Value Index revealed dwelling values across Australia’s capital cities were virtually flat over the month of September. The Index recorded a 0.1% rise in values over the month. This translated into a 2.9% capital gain over the third quarter of 2014.
The flat result for September comes as five of Australia’s capital cities recorded a fall in values over the month whilst only Sydney (+0.8%), Brisbane (+0.7%) and Adelaide (+0.9%) recorded an increase in dwelling values over the month of September.
However, as the market celebrates these results, RP Data’s research head Tim Lawless
noted that when you look back through the cycles of the housing market, the current growth phase isn’t as aggressive as what was recorded over previous cycles.
“At their peak, on a rolling annual basis, capital city dwelling values increased at a faster pace over each of the previous three growth cycles in 2009/10, 2007 and 2001/03. The big difference over this cycle is that growth has been very much concentrated within the nation’s two largest capital cities and has increased for a longer period than the previous two growth phases.”
Lawless said that what is concerning is that we have now seen the ratio of housing debt to disposable income reach a record level at 137.1% and we are seeing substantial investor concentrations within the two largest capital cities, particularly in inner-city unit markets within these cities.