Full RP Data April house price release

Advertisement

By Leith van Onselen

Following on from my post yesterday on RP Data’s daily dwelling values index results for April, RP Data has released its full results, which also cover the smaller capitals and regional areas (see next table).

ScreenHunter_7307 May. 01 10.25

As you can see above, the smaller capitals and the regions had a mixed month in April, with rises in Hobart (+1.6%) and Darwin (+0.3%) offset by falls in Canberra (-1.5%) and ‘rest of State’ (-0.4%).

Growth momentum also continues to trend lower after peaking in April last year:

Advertisement
ScreenHunter_7308 May. 01 10.28

“Despite the slight annual rate of growth upswing, capital gains remain lower than their annual peak recorded in April last year when dwelling values were rising at the rate of 11.5 per cent per annum across the combined capitals index”…

However, Sydney and to a lesser extent Melbourne, have caught a second wind after February’s rate cut:

Advertisement

“…since the February rate cut the Sydney and, to a lesser extent, Melbourne housing markets have caught a second wind which is reflected in the higher rate of capital gain as well as the very strong auction results and rapid rate of sale for properties sold via private treaty…

“While the combined capitals trend of dwelling value growth has been substantial, the rate of growth across the Sydney housing market stands head and shoulders above the other capital cities over the cycle to date. Sydney dwelling values are now 40.2 per cent higher relative to the May 2012 trough. If you factor in the previous 2009/10 phase of growth, Sydney values are now up 65.4 per cent post GFC.”

“Melbourne is the only other capital city that comes close to this measure where dwelling values are 52.3 per cent higher post GFC…”

Below are some charts summarising the state-of-play at the state and territory level:

ScreenHunter_7309 May. 01 10.32
Advertisement

Finally, the nation’s rental market remains sluggish, with severe yield compression, especially in Sydney and Melbourne:

ScreenHunter_7310 May. 01 10.33

Rental markets haven’t seen much improvement from their sluggish pace of growth. Over the past twelve months weekly rents have increased by 1.7 per cent across the capital cities, with weekly rents falling in Perth, Canberra and Darwin over the past year. The highest rental growth can be found in Sydney, where weekly rents are 3.3 per cent higher over the year.

According to the results, virtually every capital city is seeing rental rates rising at a substantially slower pace than dwelling values which is causing severe yield compression in some cities. The low yield scenario is most evident in Melbourne where the typical house is attracting a gross yield of just 3.2 per cent. Sydney isn’t far behind with the average gross yield on a house now 3.4 per cent. Darwin remains the highest yielding city, with an average gross yield of 5.7 per cent for local houses, while Hobart yields have actually improved to be the second highest of any capital city at 5.3 per cent gross.

Advertisement
About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.