Capital gains accelerated over the past year, taking the calendar year growth rate to the fastest pace since 2009, according to the December CoreLogic Home Value Index.
December 2016 saw capital city dwelling values rise by 1.4%, taking the annual capital gain for 2016 to 10.9%; the highest growth rate for a calendar year since 2009. Factoring in gross rental yields and capital gains, housing as an asset class, earned a total annual return of 14.7% based on the combined capital cities index results.
Across Australia's capital cities, the annual change in dwelling values for 2016 ranged from -4.3% in Perth to 15.5% in Sydney, with Melbourne and Hobart also showing annual capital gains higher than 10%.
CoreLogic head of research Tim Lawless said, "Capital city growth rates have also shown a growing divergence between the broad housing product types. Over the past twelve months we have seen capital city house values rise by 11.6%, while unit values have increased by roughly half the pace at 5.9%."
"The divergence in growth rates is the most distinct in Melbourne and Brisbane, where concerns around unit oversupply have eroded buyer confidence. Melbourne house values are up 15.1% over the year compared with a 1.7% rise in unit values, while Brisbane house values are 4.0% higher over the year, with unit values falling by -0.2%."
Australia's regional housing markets generally did not experience the same growth conditions as the capital cities. Regional New South Wales showed the strongest growth conditions, with non-capital city house values rising 7.3% over the 12 month period to November 2016. According to Mr Lawless, the remaining rest-of-state regions showed relatively sedate conditions, with values rising by half a per cent across regional Victoria, 1% across regional Queensland and 1.1% across regional South Australia.
Index results as at December 31, 2016
|Change in Dwelling Values|
|Region||Qtr||YOY||Median Dwelling Price|
"Mr Lawless said, "Those regional areas with intrinsic ties to the mining and resources sector have continued to record weaker housing market conditions since the end of the mining infrastructure boom, with Perth and Darwin recording the weakest housing market conditions across the capital cities.
Mr Lawless said it is clear that housing markets across Australia have responded to regional differences in economic and demographic trends; strong population growth and economic activity have driven value growth in Sydney and Melbourne.
Post Global Financial Crisis, results show that Sydney's dwelling values have almost doubled, rising by 97.5% since January 2009, whilst Melbourne dwelling values have increased by 83.5% over the same time frame. Every other capital city has seen dwelling values rise at substantially lower rates over this period, highlighting just how strong the Sydney and Melbourne housing market conditions have been over the past 8 years.
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