Capital city home values have slowed to their lowest growth rate in a year-and-a-half.
CoreLogic’s Home Value Index for June has revealed a seasonally strong result for the month of June, but slow quarterly price growth across Australia’s capital cities. Capital city dwelling values grew 1.8% over June, but were up only 0.8% for the quarter. The result was the slowest quarterly growth since the December 2015 quarter.
“This trend towards lower capital gains across the combined capitals index is mostly attributable to softer conditions across the Sydney housing market, where quarter-on-quarter growth was recorded at 0.8% over the June quarter, down from 5.0% over the March quarter,” CoreLogic research head Tim Lawless said.
Lawless said Melbourne’s results showed more resilience, albeit still revealed a slowing market. Dwelling values rose 1.5% in Melbourne over the June quarter, compared to 4.2% over the March quarter.
Melbourne also had the highest annual growth rate, overtaking Sydney. Dwelling values in Melbourne were up 13.7% for the year to June 30, whereas Sydney prices were up 12.2% over the period.
As capital gains slowed, rental growth rose from a low base, Lawless said. Capital city rents were up 2% for the 12 months to the end of June, after remaining flat throughout 2016.
“While the rental growth turnaround will be welcomed by landlords looking to recover higher mortgage costs, the consequence is that renters are now facing renewed pressure as rents rise,” Lawless said.