The housing market has started the 2015-year on strong footing, posting a 1.3% rise in capital city house prices over January. However, the cracks are starting to show.
Despite the headline result appearing strong, the overall housing market performance varied substantially between the capital cities, according to the CoreLogic RP Data Home Value Index.
The largest cities, which have more influence over the combined capital city index due to the high number of dwellings, continued to push the aggregate index higher. Melbourne values were up 2.7% over the month and Sydney values increased by 1.4%. Hobart also recorded a strong monthly result with dwelling values up 1.6%.
However, three capital cities recorded a decline in values over January. Darwin and Adelaide house prices plummeted 1.3% and 1.2% respectively, whilst Perth values declined 0.6% over the month. Only two capital cities – Darwin and Canberra – recorded declines over December. Each saw values down by only 0.6%.
Tim Lawless, CoreLogic RP Data’s head of research says evidence of the heat leaving the Australian housing market is mounting, with all capital cities recording a slower annual rate of appreciation.
“In a sign that housing market conditions are gradually cooling, the rolling annual rate of capital gain has been trending lower. At the end of January the annual rate of dwelling value growth across the combined capitals index had slowed to 8.0%, down from the early 2014 peak of 11.5%,” he said.
“This slower rate of appreciation should provide some comfort to regulators that housing demand is starting to taper, despite the historically low interest rate environment.”