Despite Australia’s combined capital cities dwellings market stagnating in February, valuation platforms recorded a record month for average daily levels of mortgage-related activity.
The RP Data Rismark home value index results for February, released yesterday, showed there was no month-on-month growth across five of the eight capitals, after eight successive month-end increases where dwelling values rose by 10%.
Sydney, Hobart and Darwin were the only capitals to record a lift in home values.
The quarterly movement across the capital cities index reflects the stronger readings from January and December, Riskmark research head Tim Lawless
“The February market results are in stark contrast to earlier readings where capital city dwelling values moved 2.6% higher over the past three months.
“The likelihood is that the weak reading for February is an adjustment from the strong readings in December and January rather than the beginning of a flat to negative growth phase across the macro level housing market.”
However, RP Data said buyer demand remained very strong in February with valuation platforms recording a record month for average daily levels of mortgage-related activity.
Lawless said there will need to be more months of flat to negative movements before it can be concluded the housing market is slowing.
“Our view is that housing market conditions will start to wind down later this year as affordability constraints and low rental yields dampen market conditions. Additionally, with a belief that mortgage rates are likely to start tightening later this year, it may help to quell some of the exuberance we have been seeing.”
Although February was a quiet month, dwelling values have risen 13.2% since June 2012.
Rismark International CEO Ben Skilbeck said Sydney continued to be the standout performer.
“When looking at individual capital cities, the Sydney market has had a surprising run of nine successive month-end increases totalling 14.1%. In keeping with what other capital cities have experienced, we would have expected some dips along the growth trajectory over a nine month period.”
The February results show the premium end of the housing market gathered pace while at the more affordable end of the market, capital gains were slowing.
That premium properties are performing strongly is likely being compounded by the low number of first home buyers active in the market place, who normally drive demand at the more affordable price points, Lawless said.