Melbourne has been crowned the best performing property market as Sydney records its weakest annual growth in house prices in 29 months.
Melbourne house prices increased by 2.5% in January, according to figures from CoreLogic RP Data, bringing the southern city’s year-on-year capital growth to 11%. Sydney house prices, on the other hand, increased by 10.5% over the year after recording minimal capital gains of just 0.5% in January.
Corelogic RP Data head of research Tim Lawless says this is a record low for the harbour city.
“While still a high rate of annual growth, Sydney’s annual rate of capital gain is now at a 29 month low and has been progressively softening since peaking at 18.4% in July last year,” he said.
According to Lawless, the power shift between Sydney and Melbourne has only happened within the last six months as Melbourne’s housing market shows more resilience in the face of slowing growth conditions.
“Previously, during the height of the growth phase, there was a large separation between Sydney’s housing market, which was streaking ahead, and Melbourne’s, where the rate of capital gain was substantial but still well below the heights being recorded in Sydney. The latest data reveals Sydney’s housing market is now playing second fiddle to Melbourne’s, at least in annual growth terms,” he said.
“In fact, over the past six months, the performance gap between Sydney and Melbourne is stark. Sydney dwelling values have reduced by 0.6% between July last year and the end of January 2016, compared with a 3% rise across Melbourne dwelling values.”
The last six months have also seen capital gains in Brisbane and Canberra, with house prices up 2%, and in Hobart where house prices rose 1.3%. Adelaide house prices remained virtually flat over the past six months with a 0.1% rise.
Over the past twelve months, six of the eight Australian capital cities recorded capital gains. After Sydney, Canberra recorded annual house price growth of 6%, followed by Brisbane (2.8%), Hobart (2.3%) and Adelaide (1.1%).
Perth and Darwin were the only two capitals to record year-on-year decreases. In Perth house prices dropped 4.1% while values dropped 2.5% in Darwin.
Across the combined capital cities, house prices cooled by 0.6% over the quarter ending January, brining toe annual capital growth rate to 7.4% over the 12 months to January.