After months of exceptionally strong gains in several cities, capital city home prices lost some momentum in November.
The average across the eight capital cities was a monthly gain of 0.1 per cent, capping off a large 3 per cent rise over spring, and an 8 per cent increase over the past year.
Perth and Darwin were the two strongest markets last month, with increases of 2.9 and 2.8 per cent respectively.
However, a 2.1 per cent fall in Melbourne prices during November dragged on the average national result, while Sydney’s 0.9 per cent growth was down on recent rises.
RP Data’s Cameron Kusher says there are signs that home prices are losing some of their momentum.
“Maybe some of that heat that we’ve been seeing in the market has now cooled a little bit, and we’ve probably passed now what would’ve been the peak growth conditions, particularly across the Sydney and Melbourne housing markets,” he said.
However, Sydney remained by far the hottest market over the spring selling season, with a 5.8 per cent gain over the three months to November.
That backs up steep price rises in winter, leaving Sydney home values 12.5 per cent above where they were a year ago.
Perth and Melbourne also had significant year-on-year gains of 8.9 and 6.6 per cent, but most other markets showed only modest rises and prices fell 1.4 per cent in Hobart over the past year.
Tasmanian prices to continue struggling
Cameron Kusher says Tasmania’s property market is likely to keep struggling.
“We’re not seeing really strong levels of interstate migration, and that really fuelled that market back in the early 2000s,” he observed.
“Plus we’ve got a higher unemployment rate in Tasmania, lower levels of economic growth … and there’s not a lot of big business located down in Hobart or in Tasmania for that matter.
“So, although those prices do look very affordable, there’s not a lot of drivers that are going to see a turnaround in that housing market at the moment.”
Hobart prices are now 15.6 per cent below their previous peak, with Brisbane 8.4 per cent lower, Darwin off 7 per cent, Canberra down 3.5 per cent, Melbourne 2.8 per cent and Adelaide 2.7 per cent.
Only Perth (2.3 per cent) and Sydney (10.1 per cent) have risen above previous highs, although the price surge in Australia’s largest city has lifted the average capital city price 2.1 per cent above its previous record.
As for the outlook, Mr Kusher expects continued moderate price growth in most markets in the low interest rate environment, and he predicts that units will outperform houses.
“Markets like Sydney, Melbourne, Brisbane, Canberra and Darwin, more than 50 per cent of all dwelling approvals over the last 12 months were for units,” he said.
“So we’re going to continue to see that densification of the inner city, and I think you might actually start to see over the next 12 months the capital growth performance for units starting to outpace houses.”