Capital city dwelling values grow for nearly 20 years straight

Capital city dwelling values across Australia have fallen only twice in the past 20 years, according to new CoreLogic figures.

CoreLogic has confirmed that in every year since the 1997 financial year, combined capital city dwelling values have grown except for in FY11 when they fell by 1.4 per cent, and FY12 when they saw a 3.6 per cent drop.

In the 2017 financial year combined capital city dwelling values grew by 9.6 per cent, up from a growth rate of 8.3 per cent in FY16.

Cameron Kusher CoreLogic head of research noted that in recent years, the “growth story” across individual capital cities had been “vastly different.”

Sydney experienced growth of 12.2 per cent over FY17 – the fifth year in a row of growth. Melbourne also saw five years of growth, reaching a growth rate of 13.7 in FY17, their greatest surge since the 2009-10 financial year.

Rates of growth in Brisbane slowed from 5.3 per cent in FY16 to 2.0 per cent, while in Darwin (-7.0 per cent) and Perth (-4.7 per cent), growth rates went backwards.

According to Mr Kusher: “Two of the primary factors influencing the rebound in capital gains during the most recent financial year was the increase in investment activity after 2015/16 which saw investment activity slow on the back of changed prudential policies implemented by APRA [the Australian Prudential Regulation Authority], as well as successive rate cuts in May and August last year that added further incentive to property buyers.”

He predicts a continued, “if not more pronounced”, deceleration in the investor market in FY18 as the APRA crackdown on investment lending, introduced in March this year, takes effect.

“Coupled with affordability constraints and higher mortgage rates, we expect the 2017/18 financial year will record a less substantial rate of capital gains than what was seen in 2016/17.”

[Related: Medium-density housing on the rise]

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Lucy Dean

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