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May 17

April Property Market Update

by Matthew Ikin
April Property Market Update

Capital gains conditions have continued to trend upwards in all bar 3 capital cities over the month of April. This trend saw capital city home values rise by a further 1.4% in March; rounding out the first quarter of the year with a total of 3.5% growth in home value.

This constant rise in home values follows suit with the last twelve months where dwelling values are on average 12.9% higher than the same time last year – the biggest increase since 2010.

While the strength of capital gains is most evident in Sydney and Melbourne, where the annual rate of growth is close to 19% and 16% respectively, the smaller markets of Canberra and Hobart are seeing some welcomed acceleration in the rate of value growth.

Adelaide and Brisbane continue to record more sustainable growth conditions; hovering around the 3.5% mark. In addition, dwelling values in both Perth and Darwin have continued to trend lower from both a quarterly and annual basis.

What has driven this growth?

  • Sydney and Melbourne have accounted for two-thirds of the nation’s growth in population over the last year. These high rates of population growth have stimulated demand in these capital cities.
  • A strong jobs market over the last year, driven by growth in the construction and services sectors.
  • Over the past five years, 75% of new jobs created in Australia have been in Sydney and Melbourne, driving overseas and Australian residents to relocate.
  • A large number of investors adding to the housing demand in capital cities. In January this year, almost 60% of houses purchased in Sydney were investment properties.

While such a high rate of capital gains across Australia is creating significant wealth for homeowners, issues relating to affordability are now more prevalent than ever; with first home buyers at record low rates of participation.

It is no surprise that the Australian housing market is experiencing a price boom; however, the real question is: when will it stop?

Source: CoreLogic