The bubble is all about Sydney and Melbourne

Core Logic’s Cameron Kusher has posted another interesting blog post examining real inflation-adjusted dwelling value growth, which has been largely confined to the two bubble markets of Sydney and Melbourne since the onset of the GFC:

Over the 7.5 years from December 2008 to June 2016, nominal capital city home values have increased by 54.9% compared to a 32.0% real change in home values. Real home values have only recorded significant increase over the past 7.5 years in Sydney and Melbourne with slight increases in Darwin and Canberra. Real home values are lower than they were 7.5 years ago in Brisbane, Adelaide, Perth and Hobart.

Sydney and Melbourne are the only capital city housing markets in which real home values are now above their previous peaks. Sydney home values are 31.6% higher than their previous peak in March 2004 and Melbourne home values are 12.4% higher than their previous peak in September 2010. Across the remaining capital cities real home values remain lower than their respective peaks. In Brisbane, real home values peaked in March 2008 and are currently 9.3% lower. After a peak in June 2010, Adelaide home values in June 2016 were 7.0% lower. Perth home values have fallen by 17.0% from their September 2007 peak. Hobart home values peaked in December 2007 and are currently 15.3% lower. Darwin home values are 19.6% lower than their September 2010 peak and Canberra home values are 4.6% lower than their June 2010 peak.

While Sydney and Melbourne real home values have surged beyond their previous peaks, in all other capital cities values remain below their peak, which in some instances were now many years ago.

For those of you that may have missed it, last month we published a detailed subscriber report entitled Sydney vs Melbourne: battle of the bubbles, which assessed a variety of metrics to determine which market has the bigger bubble.

While it was a very tight race, we determined that Melbourne’s bubble is in fact slightly bigger than Sydney’s; although that assessment is admittedly somewhat subjective.