Corelogic: Sydney And Melbourne Values "To Spread"

Corelogic's latest Housing Market and Economic Update for June 2016 takes the combined capitals index to sit five per cent higher over the first five months of the year, in "stark" contrast to the final five months of 2015.

Following the 1.7 per cent rise in capital city dwelling values in April, capital city home values fell by 0.2 per cent but the Hedonic Home Values Index has risen to 1.6 per cent over the month.

Corelogic reports that capital gains are accelerating on the back of stronger housing market conditions and capital city dwelling values sit higher over past 12 months with Sydney and Melbourne seeing the strongest annual increases in home values up 13.1 per cent and 13.9 per cent, respectively.

"There is some evidence that value growth is starting to spread to other capital cities with home values 7.1 per cent higher over the past year in Brisbane, 6.1 per cent higher in Hobart," said Corelogic's Head of Research, Tim Lawless.

"Values sit5.7 per cent higher in Canberra. Values are rising in Adelaide, but the rate of growth is moderate at 3.9 per cent over the past year. Values are down in Perth and Darwin to 4.2 per cent, and 3.5 per cent, respectively," he said.

CORELOGIC JUNE 2016 SNAPSHOT:

Home sales have trended lower over recent months: 

• Over the 12 months to May 2016 it is estimated that there were 338,785 houses and 131,339 units sold nationally with house sales -4.1% lower and unit sales -10.3% lower over the year

• Across the combined capital cities there were an estimated 207,565 houses and 95,583 units sold over the 12 months to May 2016. House sales are -6.4% lower over the year while unit sales are down -12.5%

• Most capital cities are seeing the number of sales trending lower however, there are signs in Perth and Hobart, where home values are falling, that sales volumes are stabilising and potentially increasing a little

• It is important to note, the large volume of off-the-plan sales currently means there is a high likelihood unit sales volumes will be revised higher over the coming years.

Overall weakness in rental market: 

• Combined capital city house rents are currently recorded at $489/week while unit rents sit at $469/week

• House rental rates have fallen by -0.7% over the past year (largest fall on record) while unit rents have increased by 1.6%

• In both Perth and Darwin, rental rates have fallen over the year for both houses and units

• Aside from Hobart, where rental rates are up 3.7% over the year, no other capital city is recording rental growth in excess of 3.0%

• The current movement in rental rates, coupled with value growth have resulted in rental yields trending lower over the year

• Gross rental yields for houses are currently recorded at 3.3% and unit yields are 4.2%, both of which are record lows

• 12 months ago gross rental yields were recorded at 3.6% for houses and 4.6% for units.

Selling time of homes has increased slightly, while discounting levels are falling for units: 

• The typical capital city house is currently selling at 44 days compared to 42 days a year ago while the typical capital city unit takes 42 days to sell, the same as one year ago

• The average level of discount is recorded at 6.0% for houses and 5.3% for units compared to 5.9% for houses and 5.8% for units 12 months ago

• Auction clearance rates have rebounded in 2016 and were in the high 60% range last week, averaging 68.4% so far this year.

Both new and total listings are higher than they were a year ago: 

• Over the past 28 days there were 42,843 new homes listed for sale nationally and 26,093 of these were listed across the capital cities

• New listings are 1.9% higher than they were a year ago nationally and 1.3% higher across the combined capital cities

• There were 240,927 total listings nationally over the past four weeks and 107,467 total capital city listings

• Nationally, total listings are 1.8% higher than a year ago while they are 10.4% higher across the combined capital cities.

Economic data remains mixed

• New lending to both investors and owner occupiers has fallen from recent peaks with investor lending recording a much greater decline

• Total housing credit is rising however, investment credit growth continues to slow and is now well below APRAs 10% threshold for annual growth

• The rate of population growth at a national level has continued to slow over the September 2015 quarter

• Dwelling approvals increased in April and although they remain very high they remain below their peak

• After falling to the lowest level in seven months in April, consumer sentiment rose in May, to the highest levels seen since January 2014

• The unemployment rate was recorded at 5.7%, unchanged from March and remaining at its lowest level since September 2013

• The Consumer Price Index was released for March 2016 over the past month and it fell by 0.2% over the quarter to be just 1.3% higher over the year with underlying inflation at 1.5% over the year, both of which were well below the RBA’s target range of 2% to 3%.