With the exception of Perth and Canberra, Australian capital city house prices continued to rise in February.
Corelogic RP Data’s Hedonic Home Value Index rose by 0.5% from January, leaving the increase over the past three months at 1.4%.
As opposed to the trend seen throughout 2015, the strength in February was concentrated in capitals outside of Sydney and Melbourne.
Hobart, at 2.9%, recorded the sharpest monthly increase, narrowly outpacing gains of 1.9% and 1.8% for Adelaide and Brisbane.
Prices in Sydney and Melbourne, the largest and most expensive housing markets in the country, rose by 0.5% and 0.3% respectively.
Perth and Canberra, at 1.1% and 0.2%, were the only capitals that saw house prices fall during the month.
Despite the modest 0.3% increase registered, Melbourne retained the title of the hottest housing market in the country with prices rising 11.1% from 12 months earlier.
Across the capitals, the annual growth rate slowed to 7.6%, largely as a response of Sydney’s heavy weighting in the index, along with a recent deceleration in price growth in the city.
The table below, supplied by CoreLogic RP Data, reveals the monthly, quarterly and annual price changes across Australia’s capitals.
According to Tim Lawless, CoreLogic RP Data’s head of research, house price gains continue to outpace those for units, although the gap is narrowing.
“Over the past year, house values have increased by 7.8% compared to a 6.2% increase in unit values,” says Lawless. “Over the current growth phase, house values have increased by a total of 33.3% compared to a 22.8% total rise in unit values.”
With prices in Sydney and Melbourne rising substantially faster than wages and household income, Lawlesss suggests that buyers are now finding value in markets that up until recently have underperformed.
“The trend in home value growth is showing signs of increasing in those markets that have previously underperformed,” says Lawless.
“These include Brisbane, Adelaide, Hobart and Canberra. Affordability constraints aren’t as apparent in these cities and rental yields haven’t been compressed to the same extent as what they have in Melbourne or Sydney.
“Home values increased in Brisbane by 5.5% over the past year, which is the fastest annual rate of value growth in a year. In Hobart, home values are 6.2% higher over the year, which is its fastest annual rate of home value growth since July 2010.”
Many analysts, including Lawless, expect house price growth nationally will moderate in the year ahead.
“Overall, the latest results from CoreLogic RP Data provide further evidence of a controlled moderation in the pace of home value appreciation,” says Lawless. “With the Reserve Bank meeting today to deliberate on interest rates, the moderating trend in the pace of home value growth is likely to be a welcome development in the housing market.”