Home values still growing but at slower speeds

Australian home prices increased for the 19^th consecutive month in August, with the national median price rising by 0.5% to a median $802,357, according to new figures from CoreLogic. However, there is significant diversity between the capital city markets, with some areas recording price falls. Home values rose the most in Perth at 2 percent but fell the most in Canberra by 0.4 percent.

CoreLogic says the pace of price growth across the country is slowing, primarily due to affordability constraints and an easing of very tight supply and demand in the strongest markets. Over the three months ending August 30, the national median rose by 1.3 percent, which is less than half the 2.7 percent increase recorded over the same period last year.

Perth remains the hottest property market in the country, with values rising 2 percent to a median of $785,250 last month. Values rose by 1.4% in Adelaide to a median $790,789, and by 1.1% in Brisbane to a median $875,040. Sydney home values lifted by 0.3% to a median price of $1,180,463.

Four capital cities saw a fall in home prices in August, led by Canberra with an 0.4 percent fall to a median value of $845,875. Melbourne and Darwin recorded an 0.2 percent drop to a median of $776,044 and $504,367, respectively. Hobart values softened by 0.1 percent to $655,114.

For the first time since February 2015 when Western Australia was coming out of a mining boom, Perth’s median home value is now higher than Melbourne’s median price. Adelaide has also reached a new milestone with its median value also exceeding Melbourne’s for the first time in the four decades that CoreLogic has been tracking home prices.

Melbourne’s median price is now the third lowest among the capital cities. While the city’s higher proportion of apartments skews its overall home price median lower, there are other factors behind Melbourne’s softening market. These include higher supply, with Victoria building more homes over the past decade than any other state or territory, and lower investor demand due to increased taxes.

CoreLogic’s Head of Research, Eliza Owen said seasonality may have contributed to weaker overall value growth throughout Winter, but affordability was the greater factor. Higher interest rates are limiting buyers’ borrowing capacity and high cost of living pressures are reducing demand.

CoreLogic estimates that an affordable purchase for a median-income household is just $500,000. However, the national median value has just risen above $800,000. Ms Owen said this discrepancy has likely narrowed the buyer pool to wealthier and higher-income buyers.

Sydney

Sydney’s median house price rose by 0.3 percent in August to $1,471,892. The median apartment price rose by 0.5 percent to $859,050.

Melbourne

Melbourne’s median house price fell by 0.2 percent in August to $929,715. The median apartment price dipped 0.1 percent to $610,652.

Brisbane

Brisbane’s median house price increased by 0.9 percent in August to $966,382. The median apartment price rose by 1.7 percent to $653,325.

Adelaide 

Adelaide’s median house value lifted 1.4 percent in August to $844,963. The median apartment price rose by 1.5 percent to $555,464.

Perth 

Perth’s median house price rose strongly by 1.9 percent in August to $818,839. The median apartment price increased by 2.2 percent to $561,582.

Canberra  

Canberra’s median house price eased 0.3 percent in August to $967,933. The median apartment price fell 0.5 percent to $579,774.

Hobart

Hobart’s median house price dipped 0.4 percent in August to $692,606. The median apartment price went the other way, rising by 1.3 percent to $549,569.

Darwin  

Darwin’s median house price dipped by 0.1 percent in August to $589,392. The median apartment price fell 0.5 percent to $355,297.