House price growth continues to slow across Australia, and only three capital cities are posting increases, according to the latest monthly survey from RP Data CoreLogic.
The group's home value index results found that median prices across the country edged up 1 per cent during October, and Melbourne led the way with a 1.9 per cent rise.
Sydney followed with an increase of 1.3 per cent for the month, while Brisbane was third with a 0.6 per cent rise.
The rest of the state and territory capitals registered falls in dwelling values, with Hobart down 2.4 per cent and Canberra off 2.3 per cent. In Perth, dwelling prices were virtually unchanged month-on-month, down 0.1 per cent.
In absolute terms, Sydney as usual posted the highest median dwelling price for the month, of $680,000, followed by Melbourne at $555,000.
Darwin was third with a median price of $550,000. The cheapest capital city is Hobart, where an average dwelling costs just $315,000.
The latest data confirms a moderating price rise trend across Australia, including in cities where strong investor demand continues to drive up the costs of mainly inner-city units and other type of dwellings.
Experts have attributed consistent price inflation in the inner suburbs of Sydney and Melbourne to strong investor demand from overseas buyers and self-managed superannuation funds, combined with the call for student rental accommodation.
However, year-on-year price growth across the country has slowed from a peak of 11.5 per cent in April this year to 8.9 per cent in October. For the first 10 months of this year, the growth rate was 7.3 per cent, compared with 10 per cent in 2013.
The national market is increasingly fragmented: year-on-year capital growth in Sydney is 13.1 per cent, while Melbourne's is 8.9 per cent and Brisbane's is 5.6 per cent.
Canberra dwelling prices have barely grown 1 per cent in the last 12 months.
RP Data's senior research analyst Cameron Kusher told BusinessDay the latest survey confirmed an emerging trend of divergence between different capital cities' performances, and moderating growth in the high-demand urban centres.
"If you talk at a national level, obviously that's driven largely by Sydney and Melbourne, but it's not a national recovery," he said.
"It's not really strong growth nationally - it's really a Sydney and Melbourne story."
A surge in property listings has done nothing to dampen buyer demand with home values increasing by a further 1.3 per cent in October, new figures show.
According to RP Data, Sydney, Melbourne and Brisbane were the only cities to record a rise in dwelling values over the month, highlighting weaker housing market conditions outside of Australia's largest cities.
But the growth within Sydney was also unevenly spread - house values surged by 1.6 per cent while unit values were completely flat. It is a similar trend over the quarter with house values up by 4.5 per cent, well above unit values, which are up just 1.7 per cent.
"We are seeing ongoing demand for medium and high density apartments but at the same time that is really where a lot of the new supply is coming on," said RP Data research director Tim Lawless.
"That is probably having a dampening affect on the overall rate of value appreciation."
Sydney's combined dwelling values have grown by 3.9 per cent over the past quarter, but it is clear that the annual growth rate is slowing.
Year-on-year values are up by 13.1 per cent according to RP Data, well down from the 16.7 per cent recorded in the year to April 2014.
"It is simply a case of the market losing some of its steam," said Mr Lawless.
"[Values] are still going forward at a great rate of knots but not quite as fast as earlier this year."
The growth over October came despite a surge in auction listings.
According to the senior economist at the Domain Group, Dr Andrew Wilson, last month was the busiest October for auction listings on record.
With about 880 auctions on Saturday and more than 900 scheduled for this coming Saturday, November is also set to be a record-breaking month.
"It is an unprecedented listings boom," said Dr Wilson.
RP Data’s daily index recorded a 1.08% rise over the month at the 5-city level, with values rising in Sydney, Melbourne and Brisbane, but falling in Adelaide and Perth. It was the fifth consecutive monthly increase in values, with values also up by 2.37% over the quarter. Price growth appears to be well past its peak, with annual growth trending down nationally on the back of Sydney and Melbourne. Values are now 11.4% above the October 2010 peak at the 5-city level, with all major capitals except Brisbane above water. Values have also gained 20.3% since their May 2012 trough, with all capitals rebounding from their respective lows.
03 Nov 2014 RP Data CoreLogic Home Value Index Release
The RP Data CoreLogic Home Value Index registered a 1.0% capital gain across the combined capital cities over the month of October, however the annual rate of growth has continued to trend lower.
According to the RP Data CoreLogic Home Value Index, dwelling values across Australia’s capital cities increased by 1.0 per cent over the month of October. The data highlights that despite a slowdown in growth in September, values continued to rise, increasing by 2.2 per cent over the past three months. Although combined capital city home values were up by 1.0 per cent over the month, only Sydney (1.3%), Melbourne (1.9%) and Brisbane (0.6%) actually recorded value rises over the month.
Dwelling values rose by 2.2 per cent over the three months to October 2014 however, only half of the capital cities actually recorded an increase in values. According to Mr Lawless this result highlights weaker housing market conditions outside of Australia’s largest cities.
According to Mr Lawless, Sydney, Melbourne, Brisbane and Adelaide (which happen to be four of the five largest capital cities), were the only capital cities to record an increase in home values over the past three months. Sydney continues as a standout with home values increasing at a rate of more than 1 per cent a month, up 3.9 per cent over the past three months. He said that Perth and Canberra have clearly moved through the peak of their growth cycles.
The greatest value falls over the last three months were recorded in Hobart (-2.8%) and Canberra (-2.4%).
"Looking at the increase in home values over the 12 months to October, it is clear that the rate of capital growth is continuing to moderate. Despite the annual rate of value growth slowing, all capital cities have still recorded an increase in home values over the past year. Home values across the combined capital cities have increased by 8.9 per cent over the twelve months ending October ’14, which has slowed from a peak of 11.5 per cent in April of this year," Mr Lawless said
Sydney, and to a lesser degree Melbourne, continued to be the main drivers of the increase in home values. Over the past year, Sydney home values were 13.1 per cent higher, while Melbourne values were up 8.9 per cent. Brisbane was the third best performing capital city for value growth over the year with values up 5.6 per cent followed by Darwin where values rose by 5.0 per cent. Elsewhere, value growth was more subdued with increases of 3.4 per cent in Perth, 4.3 per cent in Adelaide, 4.4 per cent in Hobart and 0.9 per cent in Canberra.
Mr Lawless said, "Despite the fact that the annual increase in home values is slowing, other indicators remain strong."
Auction clearance rates continued to hover around the 70 per cent mark week-to-week while volumes across RP Data real estate agent and valuation platforms remained strong which is indicative of heightened levels of industry and mortgage market activity. The number of new properties listed for sale continues to rise as are total listing numbers. However, Mr Lawless said that the fairly rapid rate of sale is resulting in a slower increase in total listings than new listings.
Conditions across capital city rental markets remained subdued, with weekly rents rising by only 1.8% over the past twelve months; the lowest annual change in capital city rents since the year ending August 2003.
According to Mr Lawless, the consistent over performance of dwellings values compared with dwelling rents has been compressing yields.
"With rents being substantially outpaced by dwelling values, the rental yield scenario is slimmest in Melbourne where the typical house is achieving a gross yield of just 3.3% while Sydney’s average yields aren't a great deal higher at 3.7%.
"Darwin and Hobart are showing a much healthier yield profile with the typical dwelling providing a gross yield of 5.4% and 5.9% respectively," Mr Lawless said.
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