This article is from the Australian Property Journal archive
WHILST the housing market downturn gathers pace in the city’s biggest markets, analysis of dwelling prices over 20 years shows values Melbourne has increased by 274.6%, with Hobart, Canberra and Sydney also experiencing growth of more than 200%.
Despite the huge attention the recent house price boom and now downturn have received, the five-year period to January 2004 was the period of greatest growth.
CoreLogic’s Cameron Kusher found national average growth over 20 years came in at 197.4%, centred around the capital cities with 212.4%, while regional markets grew by 150.3%.
The highest-performing regional market was in New South Wales, with 185.6%, closely followed by Victoria with 179.5% and Tasmania with 167.2%. South Australia recorded 125.1%; Queensland 123.6%, and Western Australia 77.5%.
The Northern Territory posted growth of 129.5%, but the struggling Darwin market saw just 38.4% growth over the past two decades – forced down by a 26% drop since its 2014 peak – making it the only capital to be outperformed by its associated regional market.
Hobart prices were up by 237.0%; Canberra’s by 230.7% and Sydney’s by 201.9%. Adelaide was up by 193.8%, Brisbane by 182.8% and Perth by 148.0%.
The latest CoreLogic Home Value Index showed the rolling quarterly fall is now at the fastest pace since the downturn began for Sydney and Melbourne. Sydney values tumbled by 4.5% over the three months to the end of January, level with prices in July 2016, and by 4.0% in Melbourne, at January 2017.
Nationally, the 5.6% fall in prices over the 12 months to January was the largest since March 2009. Capital cities are down by 6.9% in that time – the biggest drop since February 2009 – and regional markets by a much more moderate 0.8%, but still came in at the biggest fall since October 2012.
The most recent five-year period has seen dwelling values increase by 19.4%. Capital city prices are up 20.6% and the regional markets 14.9%.
Perth (15.6%) and Darwin (24.4%) have recorded large falls, while Hobart has led growth with 35.1%. Regional SA is down by 1.1%, regional WA by 22.6% and regional NT 7.3%; while regional NSW recorded the value increase with 28.2%.
Melbourne grew by 29.6% and Sydney by 28.9%, which takes into account the current fall in prices. The previous five-year period saw prices grow by 32.3% and 36.5% respectively.
“The housing market is seeing several headwinds that have not been seen for some time,” Kusher said. “Throughout most of the past 20 years, credit has been becoming easier to access, since late 2014 credit has increasingly become harder to access. Furthermore, ongoing strong value growth in Sydney, Melbourne and Hobart has seen housing affordability rapidly deteriorate over recent years.”
“Finally, economic conditions outside of NSW and Victoria have tended to be quite weak over recent years which has curtailed housing demand in these markets.”
The five years to January 2004 saw national increase by 80.2%, driven by 82.0% growth across the regional markets, ahead of the 79.6% in the capitals. It was the only five-year period in which the regional markets outperformed the capitals.
The biggest growth in the period was seen in Canberra (110.9%), followed by Hobart (99.7%), Brisbane (99.3%) and Adelaide (87.0%); and then Sydney (79.8%), Melbourne (77.1%) and Perth (63.5%), while Darwin was the only capital that contracted, by 3.9%.
Regional growth was led by NSW (108.8%), followed by Victoria, Queensland and Tasmania all around the 80% mark. SA (64.7%) was next, and then NT (28.9%) and WA (24.4%).
Value growth was pulled back to 14.9% nationally over the following five years, with capital city growth at 15.2%, led by Darwin (57.1%) and Perth (52.3%) and regional markets 14.2%, similarly underpinned by WA (80.9%) and NT (47.5%), as the mining boom took shape.
The five years to January 2014 marked the period following the global financial crisis and the end of the mining boom. The 20.3% national growth was driven by low interest rates and market stimulus, and took place almost entirely within the capital cities, which were up by 25.3%.
Sydney and Melbourne were much stronger than elsewhere, while Brisbane and Queensland growth was slashed, and regional NT prices grew by 30.2%. Perth slowed to 18.0% and Darwin to 21.2%, and regional WA softened to just 1.8%.
Kusher said the past performance is certainly not an indicator of future performance, and that most regions have seen some substantial increases in dwelling values over the past two decades.
He said data also showed that over five year increments, the best regions for growth in a given five-year period are typically the weaker areas for growth over the following five years.
Australian Property Journal
