In the year to November 2016, Australian dwelling values saw an increase of 4.49%. This is above the 3.77% annual growth average since 2009, when Australia felt the effects of the 2008 GFC. However, growth was below the November 2015 figure of 6.63%.
Table 1 shows the repeat sale growth summary for the major Australian dwelling markets at November. The highest growth for the November quarter was in Hobart houses, where the median repeat sale value increased 2.39% in the last 3 months. Hobart houses also had the strongest growth of the major aggregate markets in 2016, with a 6.01% increase in the year to November.
While these figures are low relative to the double digit growth seen in 2014-15 (for example Sydney houses increased 15.71% in the year to November 2015), major Australian housing markets are likely to return to norms of single digit dwelling growth as softening economic conditions catch up with dwelling demand.
ACT houses increased in value over the quarter, and displayed a healthy return of 3.32% over the year. However, the Mr Fluffy buyback scheme continues to put pressure on this market, with high construction costs potentially inflating growth figures.
Hobart dwelling values were expected to increase over 2016 as those priced out of the Sydney and Melbourne markets looked elsewhere for affordable capital growth strategies. The latest Residex State Market Report highlights the many benefits of the area, which include excellent agricultural produce, its popularity as a ‘staycation’ and international destination as the Australian dollar has fallen over the year, and its relative affordability.
Melbourne houses and units were also strong performers in the November quarter, with quarterly growth of 2.18% and 1.57% respectively. Despite persistently high prices, Sydney houses and units were not far behind, increasing 2.18% and 1.30%.
Sydney and Melbourne continued to be popular with investors as well as overseas and interstate migrants over 2016. According to ABS lending data from October this year, approximately 49% of new loans (excluding those for re-financing) were comprised of investors. Part of the resurgence in investor activity may be explained by expansionary monetary policy.
In September, Sydney dwellings experienced an uplift in annual capital growth – following the August rate cut decision – while Melbourne growth continued to ease. However, as the rate of capital gain across Melbourne has typically shown a slight lag on Sydney, Melbourne could also see growth rates pushed up in Q1 2017. These movements are displayed in Graph 2.
Perth basically flat for 10 years according to Residex. Sydney back to around 7.5%pa 10 year growth. Also back the historical situation where the median house price in Brisbane and Perth is half that of Sydney, and most other capitals lower again. Fascinating!
For Aussie property bears, "denial", is not just a long river in North Africa.....
Perth basically flat for 10 years according to Residex. Sydney back to around 7.5%pa 10 year growth. Also back the historical situation where the median house price in Brisbane and Perth is half that of Sydney, and most other capitals lower again. Fascinating!
Indeed it really puts the nonsense about it being a bubble to bed. What's fascinating with Perth is it essentially stayed flat through a mining boom.
The mining boom didn't really kick off until 2006, so i'd argue the largest capital gains came before the boom.
I'm defining boom by the number of people employed in mining.
If you look back prior to that period they also had a long period of low capital gains.
hmm.. I would argue people started flooding to WA from 2004/5.
That matches nicely with my earlier chart showing prices ramping up from around 2004.. people knew a rush was on and bought before they moved there ?? ... interesting they hit a brick wall prior to 2007, while net migration was still positive... perhaps the writing was on the wall, or perhaps the limits of what people were willing to pay despite mania were reached.
RE: previous low capital gains... yup... fair enough... after a long spell like that, bulls charge.... it certainly happened in Tassie.
hmm.. I would argue people started flooding to WA from 2004/5.
That matches nicely with my earlier chart showing prices ramping up from around 2004.. people knew a rush was on and bought before they moved there ?? ... interesting they hit a brick wall prior to 2007, while net migration was still positive... perhaps the writing was on the wall, or perhaps the limits of what people were willing to pay despite mania were reached.
RE: previous low capital gains... yup... fair enough... after a long spell like that, bulls charge.... it certainly happened in Tassie.
Definitely fleeing like rats on a sinking ship at the moment. Where are they going and what will they do?
7.5% is 2-3 times wages you turnip! The very definition of a bubble.
Well except the *preceding* 10 years saw very little growth in Sydney prices - less than wages growth and CPI. The last 10 are just catch-up, with probably a bit of an over-shoot.
7.5% is 2-3 times wages you turnip! The very definition of a bubble.
Maybe in the midst of the keyboard mashing you missed the part where it had been flat for 10 years prior?
Rastus2
22 Dec 2016, 04:18 PM
hmm.. I would argue people started flooding to WA from 2004/5.
That matches nicely with my earlier chart showing prices ramping up from around 2004.. people knew a rush was on and bought before they moved there ?? ... interesting they hit a brick wall prior to 2007, while net migration was still positive... perhaps the writing was on the wall, or perhaps the limits of what people were willing to pay despite mania were reached.
RE: previous low capital gains... yup... fair enough... after a long spell like that, bulls charge.... it certainly happened in Tassie.
I agree it started in 04/05, but from that level it was still below the previous levels so I wouldn't call it boom territory, nor would anyone really identify it as a boom from just employment numbers.
You average rates were also higher during the price growth in perth. So low rates and high mining employment and high immigration did nothing to boost perth prices significantly.
It looks for all the world like the best predictor to price rises, is an absence of price rises for an extended period combined with positive population growth.
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